Final Marketing - Niraj

Marketing In Hospitality 2015
Table of Contents
1.1) Discuss concepts of marketing for a relevant services industry. [M1] ............................................. 6
Marketing: Past and Present ................................................................................................................ 6
Marketing in Hospitality Industry: A Brief Introduction ........................................................................ 6
Customer needs/wants and Marketing Segmentation ......................................................................... 7
Implementation of Need/Want based marketing in Hospitality Industry .............................................. 8
Niche Marketing .................................................................................................................................. 8
Customer Relationship Management ................................................................................................... 9
Conclusion ........................................................................................................................................... 9
1.2) Assess the impact of the marketing environment on the industry. ............................................... 11
Introduction ...................................................................................................................................... 11
External or Macro-environmental factors .......................................................................................... 11
 Political factor ........................................................................................................................ 11
 Economical factor .................................................................................................................. 12
 Socio-cultural factor ............................................................................................................... 13
 Technological factor ............................................................................................................... 13
 Environmental factors ............................................................................................................ 14
Micro-environmental or internal factors ............................................................................................ 15
 Employees ............................................................................................................................. 15
 Customers.............................................................................................................................. 15
 Intermediaries and Suppliers .................................................................................................. 16
 Competitors ........................................................................................................................... 16
Conclusion ......................................................................................................................................... 16
1.3) Evaluate the relevance of consumer markets in the industry. ....................................................... 18
Introduction ...................................................................................................................................... 18
Who are the consumers in Services Industry? .................................................................................... 19
Why is it important to study and determine consumer buying behaviour in services industry? .......... 19
Advantages to be gained from consumer market in the industry. ...................................................... 19
Conclusion ......................................................................................................................................... 20
1.4) Discuss the rationale for developing different market segments. [M2] ......................................... 21
NirajThapaliya Page 1
Introduction ...................................................................................................................................... 21
Market segmentation to target particular customers and create products and services based on their
preference. ........................................................................................................................................ 22
Market segmentation allows an organization to pour maximum resources and energy into a particular
segment that is performing well, thus, maximizing profits. ................................................................ 22
Market segmentation is helpful in determining untapped markets, thus, creating opportunities ....... 22
Market segmentation is helpful in minimizing losses during launch of a new product or during
experimentation. ............................................................................................................................... 23
Market segmentation is helpful in building long term relationship with the consumers by increasing
customer value perception. ............................................................................................................... 23
Conclusion ......................................................................................................................................... 23
2.1) Assess the importance of components of marketing mix to the industry. ..................................... 25
Introduction ...................................................................................................................................... 25
Place.................................................................................................................................................. 25
Product ............................................................................................................................................. 26
Pricing ............................................................................................................................................... 26
Promotion ......................................................................................................................................... 26
People ............................................................................................................................................... 27
Process .............................................................................................................................................. 28
Physical Evidence............................................................................................................................... 28
Conclusion ......................................................................................................................................... 28
2.2) Analyse pricing strategies and policies in relation to the industry. [D1] ........................................ 30
Introduction ...................................................................................................................................... 30
Value based pricing ........................................................................................................................... 30
Situational/Conditional Pricing .......................................................................................................... 31
 Geographic Pricing ................................................................................................................. 31
 Seasonal Pricing ..................................................................................................................... 31
Competitive pricing ........................................................................................................................... 32
Bundling ............................................................................................................................................ 32
Psychological pricing.......................................................................................................................... 32
Conclusion ......................................................................................................................................... 33
3.1) Evaluate the role of promotional mix. ........................................................................................... 34
Introduction ...................................................................................................................................... 34
Role of promotional mix in attracting new customers. ....................................................................... 34
Role of promotional mix in retaining available customers. ................................................................. 35
Gaining competitive advantage through promotional mix.................................................................. 35
Misuse of promotional mix: Deceptive Marketing and False Advertising. ........................................... 35
Conclusion ......................................................................................................................................... 36
3.2) Plan an advertising campaign for a services industry operation. [M3] .......................................... 38
Introduction ...................................................................................................................................... 38
Current number of visitors ................................................................................................................. 38
Objective ........................................................................................................................................... 38
Available Media ................................................................................................................................. 38
Target Audience ................................................................................................................................ 39
Selection of Media ............................................................................................................................. 39
Estimated Budget .............................................................................................................................. 40
Available Budget................................................................................................................................ 40
Revised Objective .............................................................................................................................. 40
Preparation of a Slogan ..................................................................................................................... 41
Methodology and Procedure ............................................................................................................. 41
 Newspaper ( The Himalayan Times)........................................................................................ 41
 Billboard ................................................................................................................................ 41
 Public Transport ..................................................................................................................... 41
 Pamphlets .............................................................................................................................. 42
 Social Media........................................................................................................................... 42
Conclusion ......................................................................................................................................... 43
3.3) Analyze the role that sales promotion and public relations play in promotional efforts. .............. 44
Introduction ...................................................................................................................................... 44
Role of Sales Promotion in promotional efforts.................................................................................. 44
Role of Public Relations in promotional efforts .................................................................................. 45
Conclusion ......................................................................................................................................... 46
4.1) Discuss the relevance of market research to services industry operations. ................................... 47
Introduction ...................................................................................................................................... 47
Market research for identification of current customer demands and shift in trends. ........................ 47
Market research for determination of customer preference to set target market. ............................. 48
Market research to determine rival’s weakness and seek opportunities. ........................................... 48
Market research for problem identification ....................................................................................... 49
Market research for continual improvement of the marketing plan and increasing its effectiveness. . 49
Conclusion ......................................................................................................................................... 49
4.2) Undertake market research for an appropriate product or service. [D2] ...................................... 50
Overview ........................................................................................................................................... 50
Objective ........................................................................................................................................... 50
Research Question............................................................................................................................. 50
Estimated Budget .............................................................................................................................. 51
Methodology for information collection ............................................................................................ 51
 Survey .................................................................................................................................... 51
 Observations .......................................................................................................................... 52
Sample of prepared questionnaire: ................................................................................................ 52
Procedure.......................................................................................................................................... 54
 For Survey .............................................................................................................................. 54
 For Observation ..................................................................................................................... 55
Findings ............................................................................................................................................. 55
 Findings through Survey ......................................................................................................... 55
 Findings through observation ................................................................................................. 58
Conclusion ......................................................................................................................................... 58
Eventual Decision .............................................................................................................................. 59
4.3) Analyze the suitability of different media for marketing an appropriate product or service. ........ 60
Introduction ...................................................................................................................................... 60
Our target audience........................................................................................................................... 60
Suitability of radio ............................................................................................................................. 61
Suitability of newspaper .................................................................................................................... 61
Suitability of television ...................................................................................................................... 61
Suitability of billboard........................................................................................................................ 62
Conclusion ......................................................................................................................................... 62
4.4) Evaluate the implementation of the marketing plan for an appropriate product or service. [D3] . 63
Introduction ...................................................................................................................................... 63
Our Marketing Plan and it’s basis ....................................................................................................... 63
Implementation of our marketing plan .............................................................................................. 64
1) Carrying out marketing research ............................................................................................ 64
2) Execution of various marketing activities................................................................................ 65
Further suggestions for improved effectiveness of overall implementation of marketing plan ........... 66
Conclusion ......................................................................................................................................... 67
Bibliography.......................................................................................................................................... 68
1.1) Discuss concepts of marketing for a relevant services industry. [M1]
Marketing: Past and Present

In simple terms, marketing refers to anything or any activity that an organization carries out in
order to increase its sale and consequently maximize its profits. So, marketing can be defined as
the process of promoting, selling and distributing a product or service to customers. However, in
modern society marketing is a much more complex discipline although the core principle and
definition of classical marketing remains intact. Society is changing and advancing exponentially
because of globalization and technology, so a marketer needs to have new innovative ideas and
have good knowledge about customer needs, wants, demands and their competitors in order to
thrive in today’s business. Marketers used to be product centered previously but in today’s
market, equal emphasis is required on the services aspect as well. “The shift towards service can
be seen worldwide in several industries. For instance, software companies, personal computers
and electronics manufacturers are experiencing a massive change in their business mission,
from manufacturing goods to providing services to customers. Companies such as IBM, Dell,
Oracle and HP are relying on services as their most important source of profits [Rust and
Thompson, 2004].‖
Marketing in Hospitality Industry: A Brief Introduction

Hospitality industry is a service oriented industry so, in order to succeed, an organization should
focus mostly on its services rather than products. Additionally, it is an industry where employees
need to physically interact with the customers as they come in direct contact with the
organization. Thus, the value or the worth of money for the customers depends on the way they
are treated and the quality of service they are provided with. In other words, unlike other
industries where they are mostly product centered it becomes imminent for a marketer in
hospitality industry to focus on their services. It can be said that unlike other industries the
perception of the guest for the service provided is the only determining factor for quality of the
organization rather than the performance evaluation through the product and its quality.
Customer needs/wants and Marketing Segmentation
It is important for a marketer or an organization in services industry to identify customer’s needs
and wants. A marketer must have good knowledge of the current trends and they should strive to
fulfill those needs and wants. First step for any marketer is to be able to distinguish between a
customer’s need and a customer’s want. A customer’s need is a necessity whereas a customer’s
want is their desire for the product. Again, someone’s need might be another’s want and vice
versa. It depends from person to person and from situations to situations. For example a cell
phone can be regarded as a need for a businessman who needs to contact his clients in different
places whereas it might be regarded as a want for a student who needs it for casual conversations
with friends. Similarly, in today’s age a simple mobile phone can be considered to be a need
whereas an Iphone should be considered a want. It is also important to know that these two
change according to time and place. If a marketer produces something a customer needs or wants
then, this creates demand in the market. A demand might also be negative if consumers don’t
need or dislike the product. Generally, the demand for a product that is a need of a customer is
comparatively higher as it is a necessity for an individual.
It might also be beneficial for an organization to select its target customers. A 50 year old does
not want the same thing a 20 year old desires to have. Neither does a 20 year old have the
capacity to buy things as the 50 year old does. For example a 50 year old might want a car
whereas a 20 year old might be looking to buy a motorcycle. Similarly, the sales of cosmetic
products will not be as good in males as it does in females. Further, needs and wants may vary
according to places, ethnicities, sexes, job positions, climates etc. A marketer in today’s industry
must have good knowledge of their customer’s needs and wants and must be able to segregate
and target them accordingly. There are various ways an organization can find out the needs and
wants of the customers. Surveys, customer feedbacks and inclusion of customer participation in
forms of offers and samples are few ways an organization can undertake to find out and fulfill its
customer’s needs. “Now some companies are trying a radically new approach, giving customers
the tools to design and develop their own products. Listen carefully to what your customers want
and then respond with new products that meet or exceed their needs‖ [Hippel and Thompke,
2002]. The key here is listening to the customers and creating products according to their
demand.
Implementation of Need/Want based marketing in Hospitality Industry
In context of relevant services industry, there are also needs and wants for particular things and
an organization in this industry must be able to understand and identify them. A tourist that
comes from another country may not be looking for the same things as a local does. He may also
be able to afford more and may have high expectations in terms of luxury, the quality of service
and the quality of product itself. Similarly, it is a need for a businessman who travels to a new
place for business purposes for a place of stay whereas it is a want for casual visitors to travel to
new places. An organization in services industry should able to specifically target them and
fulfill their needs and wants accordingly. A family man will be looking for a resort in peaceful
environment whereas a young or a single traveler will be looking for a nice hotel with all
facilities and close to cities. A hotel or a resort should operate accordingly. A hotel operated in a
tourist area such as lakeside in Pokhara, Nepal, will be designed to fulfill the wants to the tourists
but it may not work for the locals. Food preference of people is another factor that influences an
organization in services industry to regulate its operations according to the demands of the
customers. Geographic distribution, ethnicities climate and culture are some of the factors that
changes a person’s food preference. An organization should have the ability to assess these
patterns and behaviors and should operate according to the demand and preference of the local
group in order to survive and thrive. It can be concluded that it is the necessity for a marketer in
services industry to conduct a business model according to the needs, wants and demands of their
target customers.
Niche Marketing
As defined by Dalgic and Leeuw [1994], niche market is ‘a small market consisting of an
individual customer or a small group of customers with similar characteristics or needs.‘ And
they further define niche marketing as ‘positioning into small, profitable homogeneous market
segments... ignored or neglected by others.‘ In other words, niche markets are untapped markets
in the society and it consists of unconventional customers who have tremendous potential value.
Marketing done for the infants and the elderly are some fine examples of niche marketing and
when an organization specialize themselves to provide service for the unconventional masses
they can themselves create a unique market otherwise neglected and strive for success as
competition is minimal. A restaurant that is focused solely on the kids, creation of exciting travel
and tour packages for the elderly and construction of a room in a hotel based on the need and
comfort of a pregnant woman are some ideas for niche marketing that can be applied in the
services industry. Creation of niche markets in services industry requires innovative ideas and an
eye for the determination the need of the neglected groups.
Customer Relationship Management

According to Armstrong and Kotler [2014] customer relationship management is defined as ‗the
overall process of building and maintaining profitable customer relationships by delivering
superior customer value and satisfaction. It deals with all aspects of acquiring, keeping and
growing customers.’ As per this concept, it is necessary for an organization to focus on customer
relations, as any organization can only build its image through customer loyalty and increase in
customer base. Self-marketing done through the word of mouth is the most effective marketing
tool because a consumer is more likely to be influenced by the words of another similar
consumer who is using the product or a service. However, building one’s image and creating
positive perception can be hard and requires constant rendering of quality service. In order to
retain the customers and maintain good relations with them, an institution needs to render quality
service and product. It also becomes essential for an organization to treat every customer fairly
and respectfully. Thus, from marketing point of view it is important to train your employees and
teach them to show respect with no attitude. “Retaining customers is good for a firm‘s economic
health. Customer retention can have a direct influence upon profitability as Bain & Co. has
shown that a five- point improvement in customer retention can lead to an increase in profits
from 25% to 80 %‖ [Reichheld and Kenny, 1990]. It should be a policy of an organization to
think ahead for future rather than just survive today. Success of any organization depends on the
way they build their customer base and the way they maintain it. Additionally, it is also a good
promotional tool as satisfied customers are bound to tell their friends and relatives which builds
goodwill on the long run. Providing good quality of service with good manners and gestures is in
itself a marketing strategy for service related industries.
Conclusion
In conclusion, the concept of marketing keeps on changing due to number of various factors.
Traditionally, organizations were profit oriented and their marketing was exclusively product
centered. However, in recent years due to advancement in technology and easy availability of
information the consumers are more knowledgeable and have access to unlimited options. Thus,
the concept of need based marketing and relationship marketing has emerged. As per the need
based marketing, organizations create products or services according to the need and want of
their customers. Furthermore, the concept of market segmentation is prevalent in present day
business, and institutions segregate their customers into different groups to individually fulfill
the demand of the particular group which results in increased satisfaction. They are also forced to
give immense consideration in building relationship with their customers in order to increase
their customer base and develop customer loyalty. Therefore, according to relationship
marketing, organizations have to focus on building proper relations with their customers and
seek to retain them which can only be achieved through maintenance of quality of service and
fair treatment. It can also be an effective tool for self-marketing as consumers are most likely to
influence and introduce other consumers through word of mouth. Lastly, the institutions in
services industry need to be innovative in bringing out new ideas of marketing such as target
untapped niche markets and adapt according to the present competitive business environment.
1.2) Assess the impact of the marketing environment on the industry.
Introduction
An environment in a market never remains the same, it keeps on changing. There are various
factors that bring about a change in the marketing environment. Some of these factors might be
under the control whereas others might not be under the control of an organization and the
organization has to learn to adapt and cope with it. The resulting change might be positive or
negative or it may affect an organization directly or indirectly. Nevertheless, any organization -
should be able to assess the current marketing environment and should also be able to forecast
the future in order to be well prepared. Like any other organization, hospitality industry is not an
exception to the changes in the environment and organizations in this industry should have
knowledge of the changing factors in the environment and should be able to cope with it and
adapt accordingly when the need arises. The change in a marketing environment might be small
or large. Some of the times it is under the control of the management i.e., it is internal whereas
other times it is out of control of any one organization and they have to face it simultaneously.
The environment over which an organization has no control or they have limited control if any at
all is called macro-environment. It is external to an organization, hence, it is also called external
environment. The environmental factors that affect an organization externally are basically
political, economic, social, technological and environmental so it also referred to as PESTE
environment. Similarly, the forces such as customers, employees, suppliers, competitors and
intermediaries are internal to an organization and they can control it most of the times. These
factors are called micro-environment or internal environmental factors.
External or Macro-environmental factors
 Political factor
Politics is a major macro-environmental factor that impacts a marketing environment. Political
instability, wars and terrors is a major concern for any operator in services industry as it can
directly be attributed to dwindling number of tourists in this sector. Lack of safety for people not
only affects foreign tourists but it affects local tourists as well. Additionally, it also impacts the
economy and the law of the country. Rise in number of foreign tourists in Nepal in recent years
is the result of some form of political stability after the civil war and the declaration of Nepal as
a republic state. As mentioned in a publication by Ministry of Culture, Tourism and Civil
Aviation of Nepal [2013] ―number of tourist arrivals significantly rose from 383,926 in 2006 to
526,705 in 2007. Similarly the number kept on increasing until 1999 when it was 491,504 but it
decreased to 463,646 in 2000 and kept on decreasing or remained at a low up until 2007. The
years after 2007 have seen significant increase in the number of tourist arrivals.‖ Nepalese civil
war started from 1996 and it ended in 2006 when Comprehensive Peace Accord was signed and
Nepal was declared a People’s Republic. The years from 1999 to 2006 were the prime period of
civil unrest in Nepal. It is obvious that people do not go to war torn areas of any country due to
the concern over their personal safety. The numbers of tourist have been decreasing in countries
such as Afghanistan and Iraq due to the ongoing war and terror. Political stability is a must for
any country to increase visitors and eventually to grow its tourism sectors. It should be noted that
any good tourist destination all over the world located in different countries is politically stable.
 Economical factor
Economy is another important external factor that impacts the marketing environment in
hospitality industry. A good economy of a country and that of the world as well is necessary for
any industry to progress. When there is recession, purchasing power of an individual decreases
due to pay cuts and layoffs. People won’t have the fund to travel or to go for holidays which will
impact the tourism and services industry in general. ―According to the article by Webber et al.
[2010] the overall economy has suffered a total net loss of 87 million pounds in the UK in the
sectors of tourism alone due to the global recession of 2009.‖ Similarly, a good economy is
required for development and access of various sectors integral to hospitality industry. People
mostly foreigners; compare Nepal to Switzerland in terms of natural beauty and geography. But
our country does not have the economy or the technology to build the infrastructures, the
destinations or the transport facilities to attract tourists from all over the world. Nepal is situated
at the lap of the Himalayas and as the prospect of ski resorts is developing it has good potential
for it. However, it does not have the economic resources to build it. Again, the lack of
investments due to poor economy can be indirectly attributed to political instability and
corruption.
 Socio-cultural factor
Socio-cultural elements such as ethnicities, religion, climate and history dictate a consumer’s
lifestyle and behavior. Food preference social norms as well as accommodation requirement of
any individual is different all over the world. Organizations in food industry which wants to go
global are the ones that are the most impacted by the socio-cultural element of the environment.
Any new organization has to be able to adapt by changing itself according to the socio-cultural
norms and preference of that locality. An established social law cannot be discarded and an
organization can succeed and thrive only if it adapts and changes itself according to the existing
social norm. For instance, pork is not allowed in Muslim community whereas beef is prohibited
in Hindu community. It becomes essential for an institution in services industry to understand the
local norms and cultures to operate properly. Similarly, a country can have various ethnicities
and preference of each ethnicity is different. An organization should be able to target a particular
ethnicity by providing foods and services of their preference. Moreover, it might be perfectly
normal for an individual in western countries or even Hindu countries to go to hotels and
romantic destinations as a couple for leisure and entertainment activities but the social law in a
Muslim country strictly prohibits it. So, understanding social law and norms is a necessity for an
operator in services industry and they should adapt and change according to the society they
operate in.
 Technological factor
Technology is advancing at an exponential rate in today’s world and the impacts from its change
is not only limited to services industry. Things that were impossible or even unthinkable in the
past have been made possible by rapid advancement in technology. Space travel, underwater
hotels, e-commerce are few of the sectors that has opened up in recent years due to technological
boom and it has created new opportunities that was beyond the realm of possibility previously.
Consumers today can find information on the tip of their fingers so they have unlimited options
to fulfill their needs. The limit and restrictions to the access of the products has been eliminated
drastically and so an organization cannot rely solely on its strength due to geographical
advantage. Additionally, an organization must strive to benefit from online marketing and e-
commerce to thrive in today’s market. It should be more transparent and use the features
available for its promotion in an effective way such as through online reviews and viral
marketing. Use of modern machineries in services industry can be cost effective provided they
produce the initial investment required which on the whole can reduce the cost of the product by
reducing operation costs. Use of technologies such as vending machines for fast foods or coffees
eliminates the need of a cashier and on the long run can prove to be cost effective, hence,
reducing the price of the product and thus creating more demand on the market. In today’s world
where people are busier compared to the past, use of drivethrus and self-checkouts can
considerably attract customers and impact the marketing environment positively. Similarly,
people prefer hotels that have lifts and elevators to the ones that does not, solely for comfort,
luxury and quickness. For further clarification as to the use of technology, tourist destination can
be situated in remote places but it does need infrastructures and access of transport which can be
built effectively through the use of existing technology. An organization in service industry
should use the technology to its best effect to attract customers and thrive in the market. Cost in
its use can be taken as an initial investment but the return in the immediate future can be huge if
used properly and carefully.
 Environmental factors
Environmental disasters such as floods, landslides hurricanes, famines, earthquakes and tsunamis
are beyond the control of any human. These are caused by natural forces and are external to an
organization. In service industry, an organization and its rivals has to suffer equally during the
occurrence of such disasters. Any such disaster impacts an organization and on the whole the
industry, negatively, as it directly contributes to the decrease in the number of tourists may it be
foreign or local. As is apparent from the recent earthquake in Nepal the number of tourists has
significantly decreased the exact numbers yet to be assessed. On the other hand, good climate
and weather conditions in a region results in the increase in the number of visitors. Sometimes,
environmental factors can be strength to an organization in a certain region. For example, a place
where it snows almost throughout the year such as northern parts of Canada can use it to its
benefit by building ski resorts and attracting adventurous tourists. Similarly a beach can be used
as a holiday destination and provide facilities such as boating, sailing, sun bathing, parasailing
etc. Thus, an organization most of the times should bear with the environmental forces in case of
disasters and cope with it whereas other times they can use it to their advantage. Anyhow, it
becomes imminent for an operator in hospitality industry to assess the environmental factors and
cope with it.
Micro-environmental or internal factors
 Employees
Employees are one of the most important factors in a micro environment especially in the service
industry where majority of the operation is based on interaction with the guest. It is important for
the employees to behave properly and provide service to their best potential as the worth and
success of any organization in this industry is based on the perception of quality of service by the
customer. An experienced employee with good manner, personality, health and attitude is a must
as it greatly influences the level of satisfaction of the customers. Especially in today’s world
which has become very transparent due to online resources such as reviews and
recommendations it is a necessity for an organization to maintain its good image and it can only
be possible through the manner of service provided by the employee. In other words, in today’s
market in service industry, an organization’s image is carried by its employees on their
shoulders. Hence, an organization should have qualified and well trained employees. Again the
employees can be affected by external factors such as economy or technology. An employer
should be able to assess these factors and keep their employees happy and well suited to carry
out the operations.
 Customers
A satisfied customer should be the goal of any organization as it is beneficial to them in the long
run. They are good source of promotion through words of mouth and can also be loyal, hence,
repeat the business and provide long term revenue. Customers are internal factors to an
organization in services industry and they should be able to target particular customers and
maintain good long term relationship with them. An organization should maintain a quality of
service and improve on it whenever possible. Additionally, they should be fair to all and be
tactful when problem arises. A customer should always be kept happy as they are the only source
of revenue and an organization should seek to build its name through them. A marketing
environment may change due to customer preference and demands or simply due to the
economic condition of the customers. Factors such as economy, politics and technology hugely
influence customer behaviors. A marketer should be able to assess these factors and fulfill their
customer’s needs the best way they can by changing accordingly.
 Intermediaries and Suppliers

Intermediaries and suppliers are other internal factors that can impact a market in a service
industry. Intermediaries are those organizations which can influence a hospitality industry
directly or indirectly. They include various agencies such as travel agencies, tour operators,
conference placement agencies etc. they can influence an organization in service industry as they
provide the industry itself with guests and additionally provides extra services to the guests when
required. An organization should have good network of related agencies to fulfill the needs of
their customers in the best possible way. Suppliers provide raw materials and products required
for the organization. A marketer should have good knowledge of the available supplies to get the
best product in a reasonable price. In case need arise they should also have access to alternate
supplies to run operations in an uninterrupted manner. The availability of resources and the
customers is a must for any organization, so, suppliers and intermediaries have high impact on
the marketing environment.
 Competitors
Unless the business is a monopoly, competitors have huge impact on the marketing environment.
Even a monopoly market is not exempt from competition. Competitors can provide substitute
goods or they can provide similar goods for lesser price. An organization should be able to assess
the position of their competitors and operate accordingly in order to survive and thrive in a
business environment. In services industry, an operator must provide best quality service to
outcompete its competitors. Additionally, it should lower its prices when required and give
promotional offers and mementos at times to attract more customers.
Conclusion
In conclusion, there are various factors that impact the marketing environment in a services
industry. These factors may be external to an organization and beyond control or it may be
internal and controllable. Political, economic, socio-cultural, technological and environmental
are some of the external factors whereas customers, employees, suppliers and intermediaries are
internal factors. These factors most of the times are interrelated and a change in one factor can
have a domino effect over the other. Environment in a market is always changing and a change
in one of these factors will directly or indirectly impact other factors and on a whole impacts the
performance in the industry positively or negatively. A change in macro factor results in the
eventual change in the micro factors, as, an organization has to adapt to the change and the only
way they can cope with it is by changing the internal factors that is under their reach. So, an
operator in services industry should be able to assess the changes in the environment and should
devise coping mechanisms to either negate the changes in an effective way or to use it to their
benefit.
1.3) Evaluate the relevance of consumer markets in the industry.
Introduction
In order to evaluate the relevance of consumer markets to the industry, we first have to know the
meaning of consumers and understand what constitutes them. Consumers are the end user of a
product or a service and they use the mentioned product or a service for consumption rather than
business or reselling. According to Armstrong and Kotler [2014] there are 5 customer markets
namely, consumer markets, business markets, government markets, international markets and
reseller markets. They mention that ‗consumer markets consist of individual and households that
buy goods and services for personal consumption.‘ Consumer markets have the largest market
share in a society for majority of industries and thus are a major source of revenue for them. The
nature of institutions in services industry is such that the operations of almost all the institutions
in the industry is based on the consumer market and therefore is of immense importance to the
sector. Any business in the services industry can succeed only when it caters to the needs of its
consumers and satisfies them. The importance of consumer markets in the hospitality industry is
relatively higher as compared to other industries because the model of business necessitates first
hand, face-to-face service and its business practices should be based on providing utmost
attention to an individual consumer. International market will not work for services industry
because the operations is predominantly service based and an organization in the industry is
limited by its inability to transfer to different places. Similar is the case for business markets,
government markets and reseller markets as the nature of its operations demands presence of
customers in close proximity. To further clarify the relevance of consumer markets to the
industry we need to first determine the type of consumers available in the industry and then
evaluate the need to study their buying pattern individually. Proper assessment of consumer
markets and their behaviours can give a firm considerable advantage and ensure smooth business
operations.
Who are the consumers in Services Industry?
Any person who travels from one place to another and during their travel uses the services of the
institutions in the hospitality industry can be deemed to be the consumer in the industry. A
consumer may be local or foreign or may fall under different sections of the society. They might
be different in gender, age, class or ethnicity and can have different characteristics. However,
they can be grouped into certain types based on their purpose of visit or nature of travel. A
consumer can be segregated into a backpacker or a solo traveller or they might be grouped under
business travellers and government authorities based on their purpose of visit. Furthermore,
consumers might be couples or a family as the nature of their travel can be different. All these
individuals that use the services of the institutions within hospitality industry compose consumer
market on a whole.
Why is it important to study and determine consumer buying behaviour in services

industry?
For a business to strive for success in services industry, it becomes important to study the buying
pattern of the consumers and fulfil their demand accordingly. An organization in services
industry exists to fulfil the need of its consumers and therefore it becomes necessary to satisfy
one’s customers and meet their expectation in order to retain them and build loyalty. Without
giving consideration and care to the available consumers a business in the industry cannot even
imagine to survive let alone operate on a regular basis. Kanuk and Schiffman [1997] define
consumer behaviour as ‗the behaviour that consumers display in searching for purchasing,
using, evaluating and disposing of products, services and ideas.‘ Consumer behaviour,
therefore, is study of how individuals make buying decisions based on factors such as price,
quantity, quality and level of service. A business that operates in services industry need to assess
the factors that influence consumer buying decisions and adapt accordingly. Therefore, in
context of services industry, the impact of consumer market is immense, hence, the need to study
the buying behaviour of the consumers so that an institution can engineer products and services
based on the preference of the available customers.
Advantages to be gained from consumer market in the industry.

Although the available market share in services industry is predominantly limited to the
consumer markets there are certain advantages that can be gained by placing emphasis on this
particular section of the market. Relationship building and its maintenance becomes much easier
as the organizations in hospitality industry require constant face to face interaction. When an
organization satisfies its guests through quality service, quality product and individual attention
it can achieve maximum level of customer satisfaction which eventually is beneficial in
developing customer loyalty and building brand image. Moreover, satisfied customers can be an
effective tool for marketing through word of mouth as they are bound to tell their friends and
relatives about the experience. It also is helpful in improving oneself through implementation
and consideration of constant customer feedbacks and suggestions. Thus, consumer market in
services industry is a key to enhance the image of the organization and improve oneself for better
performance and maximum revenue generation.
Conclusion
In conclusion, consumer markets in services industry is extremely relevant as it is a major market
share for the industry based on which services are performed and products are developed. The
nature of institutions in services industry is such that it requires constant face to face interactions
for normal operations which can only be effective when customers are in close proximity.
Therefore, placing priorities on the consumers and fulfilling their individual demand along with
quality service and considerate care is a necessity for institutions in the industry. Study of
consumer behaviour and assessment of factors that influence their buying decision and adapting
accordingly is essential to ensure success of any business in the industry. Consumers are also the
key to build a brand image and increase customer base which is helpful in enhancing one’s
business performance and maximizing profit.
1.4) Discuss the rationale for developing different market segments. [M2]
Introduction
Churchill and Peter [1998] define market segmentation as ‗a process of dividing a market into
groups of potential buyers who have similar needs and wants, value perceptions or purchasing
behaviour. The particular market segment that a marketer selects to serve is called a target
market.‘ A market can be divided into number of categories based on different available factors.
The need of an individual varies from person to person and their ultimate buying decision
depends on number of elements such as their interest, buying capacity, peer influence, social
class, accessibility etc. Therefore, organizations today segregate the market based on number of
common characteristics of the customers which eases them in targeting particular market
segment and developing a planned service or a product engineered for the given segment. Kotler
[2000] in his book, Marketing Management, distinguishes 5 types of consumer market
segmentation, namely ‗behavioural, demographic, geographic, multi-attribute and
psychographic segmentation.‘ Behavioural segmentation involves segmenting the market on the
basis of buying behaviour of the consumers whereas demographic segmentation classifies the
market on population characteristics. Similarly, under geographic segmentation market is
classified into number of geographical units, whereas multi-attribute segmentation classifies
market based on multiple characteristics and places similar consumers under the same segment.
Well performed market segmentation can have tremendous benefit for an organization and can
ease its marketing process as well as elevate business performance. Organizations today develop
and implement market segmentation due to number of its benefits. Properly developed market
segmentation allows an organization to design products and a service based on the preference of
the individual groups of customers and also is helpful in determining and targeting untapped
markets, thus, creating opportunities. Moreover, it minimizes risk while launching new products
or experimenting a new strategic plan in the market. It also allows the management to pour its
resources and energy into the segment that is most profitable and additionally helps in building
good relationship with customers through individual attention.
Market segmentation to target particular customers and create products and services
based on their preference.
The preference of individuals varies from person to person. A female might not have the same
need and expectation as that of a male and similarly, a teenager is bound to have different
demands than that of a middle aged man. Furthermore, they might have different financial
abilities, taste as well as sense of fashion. Market segmentation helps an organization segregate
their audience into different classes and fulfil the individual needs of the segment separately.
This results in increased satisfaction and is beneficial to the image enhancement of an institution.
Moreover, it also increases the sales of the product or a service and has positive effect on the
profit generation ability of a firm. For example, in context of services industry, in restaurant
students prefer fast and cheap foods whereas middle aged men usually prefer a fine dining
experience. Therefore, it becomes necessary for an organization to determine the individual need
of a particular segment of the market and fulfil them accordingly for increased level of customer
satisfaction.
Market segmentation allows an organization to pour maximum resources and energy into a
particular segment that is performing well, thus, maximizing profits.
When an organization is performing well in a particular segment of the market but has
satisfactory performance on other segments, market segmentation allows an organization to pour
maximum resources and energy into the segment that is performing well comparatively. Thus, it
helps an organization in centralizing its activities and resources into the better performing
segment which is a sure shot way to ensure optimum utilization of resources and builds potential
for revenue maximization. Thus, market segmentation is a useful tool to ensure maximum profits
through concentration of available resources into a particular segment. On the long run, it helps
an organization determine its core customers and helps them specialize into a particular field.
Market segmentation is helpful in determining untapped markets, thus, creating

opportunities
When a market is not segmented, determination of untapped markets and visualization of
opportunities can be very hard. Market segmentation is immensely helpful in determining the
untapped, unconventional sections of the society, thus, creating potential opportunities that an
organization can use for their benefit. For instance, let’s assume a restaurant serves the elderly
along with other customers but the volume of elderly visitors is considerably higher and they do
not have many places to go. A marketer can seize the opportunity and create a new restaurant
particularly for the elderly and turn into a strength for the organization.
Market segmentation is helpful in minimizing losses during launch of a new product or

during experimentation.
A launch of a new product or a service can be very risky and can have huge losses for the
organization if disliked by the customers. To minimize losses, an organization can launch a new
product, first into a single market segment, and if received well can subsequently introduce it to
the masses. This way an organization can considerably cut its losses and keep on innovating
which is a critical element for success. It can be deduced that market segmentation allows and
encourages innovation in an organization. A restaurant or a hotel can keep on innovating new
recipes and food all the while minimizing its losses. Hence, market segmentation is
tremendously helpful in services industry to minimize losses during launch of new products or
during experimentation and research.
Market segmentation is helpful in building long term relationship with the consumers by
increasing customer value perception.
In context of hotels, the need of a business traveller is different to that of a family vacationer. A
businessman might require conference halls with up to date technology whereas a family
vacationer needs peaceful environment with relevant services. Market segmentation allows
hotels to provide individual care to particular segment, thus, increasing customer value
perception. Zeithaml [1988] defines value as ‗the consumer‘s overall assessment of the utility of
a product based on perceptions of what is received and what is given.‘ Therefore, market
segmentation is helpful in building good long term relationship with the customers which
subsequently results in customer retention and customer loyalty and is extremely helpful to an
organization in the long run.
Conclusion
In conclusion, marketing segmentation refers to classifying markets into groups of similar
individuals based on number of factors. It allows organizations to target the individual segments
in a market and is extremely beneficial to them. Organizations today develop market segments to
target and satisfy particular segment of a market which is helpful in building customer relat ion
through individual attention. It also allows them to minimize losses during launch of a new
product and at the same inspires innovation. Furthermore, it helps them in determining untapped
sections of the markets, creating new opportunities and additionally allows them to pour
maximum resources and energy into a segment that is performing well, thus, ensuring
maximization of profits. Properly developed market segmentation includes all the individuals of
the society and classifies them based on their preference which allows development of
individually engineered product or a service and ultimately helps an organization gain larger
market share through increased level of customer satisfaction and higher fulfilled demands.
2.1) Assess the importance of components of marketing mix to the industry.
Introduction
Armstrong and Kotler [2012], in their book Principles of Marketing state ‗the Marketing Mix is
the set of tactical marketing tools - Product, Price, Promotion, and Place - that the firm blends
to produce the response it wants in the target market.‘ It is a tool that helps study the
components that affect the marketing process and ultimately the buying decision of the
customers. The 4ps i.e., place, price, product and promotion form the principle components of
the marketing mix but these were not enough to determine the overall factors influencing the
marketing process. In modern times, marketing mix constitutes of people, process and physical
evidence as well. These factors are within the control of a marketer and one can change these
factors and adapt accordingly in order to increase the efficiency and effectiveness of the
marketing strategy. Each of these components is equally important and requires individual
attention to form an effective marketing plan. Additionally, it aids in proper implementation of a
marketing plan as it helps in strengthening the aspects that affect the marketing process and the
buying decision of a consumer. Assessment of individual components of marketing mix gives a
firm considerable advantage as it allows a firm to add, subtract or modify different aspects of the
individual components and therefore allows flexibility dependent on the set objective or the
business environment.
Place
Selection of a proper and accessible location is a must for effective marketing and hugely
impacts the buying decision of a customer. A properly selected place of business is even more
significant in services industry because unlike products that can be delivered and distributed,
institutions in services industry require physical presence of the guests. Additionally, a centrally
located place can on itself be an effective promotional tool for an organization. A restaurant that
is centrally located in a busy place such as downtown is bound to perform better than a restaurant
located in the outskirts of the city. People can easily access the institution that is centrally located
and the relevance of the location is even more important in modern times as people are getting
busier day by day. A central location can be expensive no doubt but it can have huge return on
investments just due to the sheer volume of transactions. Moreover, the location should be
selected in relation to the nature of the organization. Resorts require peaceful environment
whereas airport hotels should in close proximity to the airports. Accessibility, however, should
be of prime importance and an operator should make sure that their institution is easily
accessible.
Product
The product itself that is being marketed is a critical component of the marketing mix and hugely
impacts the buying decision of a consumer. Consumers look for quality, quantity and packaging
of the product while deciding on buying it. If an organization fails to deliver a quality product or
the quantity as deemed fit by the customers then the overall marketing itself becomes
insignificant. In services industry, a related product along with quality of rendered services is
important for effective marketing strategy and influencing consumer decision. The food served
should be of quality in regards to taste and health along with appropriate quantity, the rooms
should be in presentable condition and properly decorated and the services rendered should be of
standard quality with emphasis on customer comfort and consideration.
Pricing
From the perspective of a buyer, the price of a product or a service is the key determining factor
in the selection process. The price set by the organization should hold the value as perceived by
the customers. The product or the service should be appropriately priced in order to encourage
the customers to buy it. Even though the product is of higher quality and the place of business is
easily accessible, if the product is inappropriately priced and the consumers do not see the value,
then, the marketing plan cannot be effective as it fails to influence the buying decision of the
consumer. Consideration should also be given to the price set by the competitors while
determining the price of the product or a service. For example, if a restaurant that has a
competitor on close proximity and the competitor offers similar product or service for lower
price, then, market shift may occur.
Promotion
No matter how good a product is or how appropriate its price, without the knowledge of the
product and its features to the prospective buyers marketing becomes irrelevant. Promotional
activities allow businesses to give the knowledge of the products and services to the prospective
buyers. Organizations today spend majority of their budget in promotional activities because it
can hugely influence the buying decision of a customer and provide huge return on investment.
Use of celebrities and athletes in promotional campaigns can entice the consumers in using the
product and thus can be beneficial for an organization. In today’s world due to rapid
advancement in technology, there are number of ways an organization can reach to its
prospective buyers. ‘Mobile telephony, the internet, social networks, tablets and other new media
devices have greatly contributed in creating a seamless globalized society unlimited by physical
distance; significantly altering the concepts of space, time and location‘ [Saxena,
2005].Therefore, there are number of ways for an organization to reach out to the masses and an
organization should utilize the available resources to influence the consumers into using the
product or a service. Furthermore, effective use of promotional resources can allow an
organization to retain customer and gain competitive advantage over their rivals. Marketing
becomes much more effective and influential when an organization uses promotional activities to
influence the customers into using the services.
People
As mentioned in the publication by The Chartered Institute of Technology [2009], ‗anyone who
comes into contact with your customers will make an impression, and that can have a profound
effect – positive or negative – on customer satisfaction. Therefore, they must be appropriately
trained, well-motivated and have the right attitude.‘ The importance of people is even more
important in services industry because the operations necessitate regular personal interaction and
business model is dependent on repeat experience. Bad attitude and improper service creates
distaste among the customers and hinders the overall marketing activity of the firm. A customer
who is discontent is unlikely to repeat the experience and can even be a source of bad marketing
who is likely to dissuade other persons from using the services of the institution. Therefore,
people or employees of the organization are of extreme importance to the marketing activity of
the firm and the firm should make sure that their employees are well behaved, well-motivated
with good attitude. In services industry, the staffs carry the image of the whole organization in
their shoulders.
Process
In hospitality industry the process of the service deliverance and the perception it has on the
guest plays huge impact on their ultimate buying decision. The wait time for the guests, the
system of delivery, the reception method and the culture of the institution constitutes some
processes in the industry and it has an impact on the perception of the guest and ultimately to the
marketing strategy. The process should be designed in a way that places the guests to the utmost
level of consideration and gives them an incentive to use the services or buy the products. Proper
processes should also be followed during the production of the food giving care to the hygiene
and quality of the food.
Physical Evidence
Physical evidence plays major role in influencing the perception of the guest. In hospitality
industry, product and services is not the first thing the guest experiences. They first come to the
institution and the first impression is made by the physical structure of the institution. The
attractiveness of the building, the colours selected the space and cleanliness of the lobby,
furniture placed, arts and decorative is some of the physical evidence in the institution that
impacts the first impression and the perception of a visitor. Due to nature of services industry
where guests are present in person, an organization should give care for proper physical evidence
in order to influence the buying decision of the customer.
Conclusion
In conclusion, there are different components of marketing mix useful in services industry and an
organization should give consideration to each individual component in order to influence the
buying decision of a customer and increase the effectiveness of the overall marketing process.
Accessibility of the selected location increases the masses and is a good marketing tool on itself.
Price is a major factor that determines the selection of a product or a service by the customers
while promotion influences and entices the prospective consumers to use the services. The
product itself should be of quality and proper quantity to ensure its acceptance by the users.
Furthermore, the good behaviour of the people guarantees repeat experience, physical evidence
gives first good impression and a thorough process designed for the ease of the customers
satisfies them. The components are equally important, however, it allows an organization to add,
subtract or modify on it individually as per the demand of the situation. The individual
components when used effectively can help in creating a good marketing plan and drive the
consumers to use the product or a service.
2.2) Analyse pricing strategies and policies in relation to the industry. [D1]
Introduction
The price of a product or a service is a key determining factor during the buying decision process
of a customer. It is apparent that if a product is too expensive or its worth is not valued by the
customer they won’t buy the product. The relevance of pricing is even more significant in the
present market of services industry as consumers today have unlimited options and competition
is really harsh. Organizations today devise different pricing strategies and policies to influence
the buying decision and perception of its customers. Not only does pricing strategies influence
consumer decision but it also presents organization with opportunities for increased sales.
‘Adjusting the prices is called pricing strategy. A pricing strategy has as goal to establish an
optimum price with current profit maximization, maximization of the number of units sold, etc.‘
[Dolgui and Proth, 2010]. Therefore, the aim of pricing strategies and policies that are adapted
by businesses is to maximize revenue through any means possible by adjusting the amount it
charges for its products or services. However, an organization should be careful while
implementing these strategies and policies because if not used with care and done randomly it
can be ineffective and even harmful for them. ‘When corporations give in to weak market
conditions (such as the recent economic downturn), or just handle pricing issues in an ad hoc
way, they will end up with irrational prices and angry customers‘ (Dutta et al., 2002). For proper
use and implementation of pricing strategies in the industry, knowledge of different strategies
that are currently popular in the market and evaluation of its effectiveness in various
circumstances is crucial.
Value based pricing

Pricing done based on the value of the product or service in the market is value based pricing.
Under this pricing strategy the price changes according to the customer value perception of the
given product or service and therefore, organizations should strive to increase their customer’s
value perception. All customers want good products and no customers want to overpay. The
customer‘s mindset about a particular company and their products determine which companies
get their business. For this reason, it is important for companies who make and price products to
understand the worth of their products as determined through their customer‘s perception in the
market [Gale and Swire, 2006]. There are different factors that might influence the perception of
customer’s value towards a product or a service. The nature of business, its accessibility or
deliverance of high quality service over a long period of time can create a value and increase the
overall worth of the organization. For instance, in services industry, the worth of a luxury hotel is
considerably higher compared to the worth of a motel because in customer’s mind, luxury hotels
possess higher value. Similarly, a customer will be willing to pay slightly higher price for the
restaurant that is operating for a long time and has good record through quality product and
service as compared to the one which does not. Institutions in services industry have to price
their products and services in accordance with the perceived value of the consumer in order to
attract them and influence their eventual decision.
Situational/Conditional Pricing
Situational and conditional pricing is widely practiced in hospitality industry where price is
changed depending on different situations. Difference in the nature and the class of the guests,
their financial abilities and distinctive situations enables operators in the industry to be flexible
with price allocation and allows maximum utilization of available opportunities. Geographic
pricing and seasonal pricing are some strategies and policies used by institutions in hospitality
industry that is flexible and depends on various conditions.
 Geographic Pricing
Under geographic pricing, different price is allocated for different locations for the same product
based on its geographic features such as climate and topography. The demand for a particular
product is different in different geographic locations and organizations should seek to take
advantage on it. For instance, in context of Nepal, the demand for hot beverages is relatively
higher in Himalayan region as it is cold there whereas the demand for cold beverages is higher in
Terai region where it is hot. Food industries can base their price for beverages based on the
demand of the people of the geography which provides them with opportunity for maximum
revenue.
 Seasonal Pricing
Majority of institution in hospitality industry operate on seasonal basis. In institutions that
operate on seasonal basis, business performance is good during on-season as number of visitors
is high whereas it significantly decreases during off-season as the number of visitors is low.
Under seasonal pricing, institutions allocate lower prices during off-season and increase it
significantly during on-season. Strategies of seasonal pricing allow organization to decrease their
rates during off-seasons to entice guests into using the service and ensure sustainable operation.
Increasing rates during on-season on the other hand, guarantees maximum revenue and allows
optimum utilization of resources. The rate of a room in five star hotels in Nepal is high during
August as it is on-season and it decreases a great deal during December and January as it is off-
season for the institutions.
Competitive pricing
Developing pricing strategies based on the price allotted by the competitors is competitive
pricing. It is necessary to consider the prices of the competitors in order to influence the
customer to use one’s service instead of theirs. Between two firms that deliver similar services or
products, a customer is highly likely to select the one that is cheaper. Well performed
competition based pricing allows firm to gain the market share of the competitors and gives them
competitive advantage for improved market performance.
Bundling
Inclusion of number of items into one bundle and allotment of price for that particular bundle on
discount is bundling. ‘Bundling has many potential benefits, including cost savings in production
and transaction costs, complementarities among the bundle components, and sorting consumers
according to their valuations‘ [Eppen, Hanson, et al. 1991]. It is helpful in sales of
complimentary items as those are provided for low cost and customers see value in buying in
masses as it is cost effective for them. Bundling gives firm profits through mass sale of number
of products and is helpful in attracting buyers through exciting offers. A good example of
bundling can be seen in McDonalds where they bundle burgers with drinks and fries and provide
it on discounted price. Therefore, bundling is also helpful in ensuring uniform sales of all
available services and products. Hotels can use bundling by including services of spas, bars,
pools and game shops during the sales of rooms at minimal cost.
Psychological pricing
Pricing model can also be designed in such a way that it has positive effect on the psych of the
customers and motivates them to buy the product or use the service. Gamliel [2010] mentions
that ‗when product attributes are highlighted in ways perceived to be positive, customer
preferences can change.‘ Buy-1-get-1-free offers and keeping prices at .99 instead of rounding it
are some fine examples of strategies used for psychological pricing. When customers just see the
word free it gives them perception of added value and motivates them to buy the product.
Similarly, amounts such as 299.99 and 99.99 tricks their minds and gives it perception of low
price and thus influences them to buy the product. For example, the price of individual food
items in most of the restaurants is left at .99 figures in order to have impact on psychology of its
guests. Hotels can use psychological pricing model in its various points of sale to develop buy-1-
get-1-free models to encourage its customers to buy the product.
Conclusion
In conclusion, price is the key determining factor that influences the ultimate buying decision of
a consumer and therefore, institutions in services industry develop and implement different
pricing strategies and policies to influence its buyers. The pricing strategy that works for one
institution may not work for another. Thus, analysis of different pricing strategies that are
existent in the present market and its effectiveness if used in the organization should be studied
first before its implementation. Value based pricing, situational pricing, competitive pricing,
bundling and psychological pricing are some popular pricing strategies that is used in the present
global market. Pricing done based on the perceived value of a product or a service is value based
pricing and under situational pricing, the price changes dependent on various situations for the
same product at any other given time. Competitive pricing involves allotment of one’s price
dependent on the competition in the market whereas bundling provides bundle of items as a
single product on discounted price. Psychological pricing has positive effect on the psych of the
prospective buyer and motivates them to buy the product or use the service. An institution in
services industry should use different pricing strategies in different circumstances and
additionally should change it with time dependent on situations. Proper use and development of
pricing strategies and policies is helpful to influence its buyer’s ultimate buying decision and
also to promote sales of its products and services.
3.1) Evaluate the role of promotional mix.
Introduction
M/s. Aiyar [n.d.] in her paper quotes Sir Paul Girolami, Glaxo’s chairman as saying: ‗any
product which makes money doesn‘t sell itself… you‘ve got to sell it and sell it hard, because if
you don‘t it won‘t be sold, however good it is.‘ Additionally, she mentions ‘that marketing is one
of the sure shot ways to increase the goodwill of an entity in this highly competitive economy and
corporate go berserk in promoting their brands by exploiting all the possible ways from media to
digital boards to hoardings, et al.‘ Organizations today spend majority of their budget on
promotional activities because the return on expenditure can be huge if used effectively. It has
been a trend to spend millions on securing the services of celebrities and athletes for their
promotional campaigns because it helps them gain a considerable competitive advantage over
their rivals regardless of the quality of the product or standard of the service they provide.
Effective use of promotional mix facilitates marketing by not only attracting new customers but
also by retaining the existing customers and at the same time gives an organization considerable
advantage over their rivals.
Role of promotional mix in attracting new customers.

An organization during its inception uses promotional mix to introduce its product to the market.
A product or a service becomes futile if the existing buyers have no knowledge about it, no
matter how good and useful it is in relations to quality, quantity or affordability. Use of
promotional mix by an organization helps deliver information to the customers about the product
regarding its quality, content, price and quantity. This gives the customers a taste of the product
and subsequently helps the customers make judgmental decision based on their preference and
ability. Additionally, by effectively using promotional mix, an organization can target its desired
customers which help them in segregating the market and thus plan constructive strategies to
achieve their aim.
Role of promotional mix in retaining available customers.
Promotion is an ongoing process and the start of it should not be the end. The initial use of
promotional mix might help an organization introduce its product or service to the market and
eventually gain them new customers but they should then work towards retaining them as well.
An existing user needs reassurances and at times the incentives to keep using the product which
can be provided through offers, discounts and premiums or through the re-innovation of the
product itself. Moreover, when done in a proper way, promotional activities establish confidence
in the mind of the user who might be initially reluctant to use the product. At the same time,
sustainable use of promotional mix helps in gaining new customers thus eventually building
good customer base and also helps in developing loyalty therefore enhancing the image of an
organization.
Gaining competitive advantage through promotional mix.

Even in our daily lives, in most of the cases, the most used product is not always the best product
available. Nevertheless, an organization attains that position because of the availability and use
of the available resources for the most effective promotional activities. Hence, promotional mix
is significant to an organization to help them gain considerable competitive advantage over their
rivals in a timely manner. We can take an example of two Italian restaurants A and B, which are
similar yet the quality of product as well as the standard of service in A is better in comparison to
B. Now, in this instance, if we limit the available promotional resources of A and give B all
available resources and tools for promotion, the one with effective promotion is certain to secure
larger market share. Even though the quality of service and the product in A is superior to B, B is
bound to initially outrival its competition due to availability and use of various promotional
activities. A will eventually gain customers and their trusts due to its quality which will take
substantial time during which period B will have already attained the majority of the market
share.
Misuse of promotional mix: Deceptive Marketing and False Advertising.

Promotional mix can be a beneficial tool for an organization as it facilitates in increasing the
sales as well as increasing the customer base and their loyalty towards an organization. It also
helps an organization gain considerable competitive advantage over their rivals and enhances
their image. However, an organization should be careful so as to fulfill the promises it delivered
during its promotional campaigns. It has been a recent trend by various organizations to exploit
the promotional mix by exaggerating and overstating the facts and making substantial claims
about the product which might not necessarily be true. Deceptive advertisements carried out
though exaggerations and overstatements might be beneficial in the short term but will be
detrimental in the long run. Not only can it have legal implications due to inability to perform but
it also can be damaging to an organization’s reputation. When product fails to deliver upon its
claims, the trust of the people will be betrayed leaving negative impact upon their perception,
eventually, damaging the reputation of the organization. On the long run this may lead to bad
marketing and loss in customer base and loyalty. Coca-cola made false claims and marketed
Vitamin Water as healthy, the consequence of which has resulted in lawsuits, having damaging
effect on the company. In the article published in Bloomberg written by Spitznagel[2013], a
lawsuit was filed in 2009 by the Center for Science in the Public Interest (CSPI), a Washington
(D.C.)-based consumer advocacy group, and a group of Vitaminwater customers in New York
and California. Coca-Cola took part in ―deceptive labeling and marketing for the soft drink,
which included claims that the drink could reduce rise for eye disease, promote healthy joints
and support ‗optimal immune function which was untrue. The consequences of deceptive
promotion of Vitamin Water through false claims for Coca-Cola amounted to loss in finance due
to the lawsuit, legal hassle, and detriment in its image, eventually resulting in loss in sales for
Vitamin Water as well as other related products from the company and eventual customer shift
towards the rivals.
Conclusion
In conclusion, promotional mix can be an important marketing tool for an organization if used
properly. Even though it requires substantial budget to be carried out the return on investment
can be huge if done effectively. An organization can introduce its product and services to the
market through the use of promotional tools, thus, it helps an organization in communicating to
the market. It eventually facilitates in gaining new customers, retaining them as well as building
customer base and loyalty. Moreover, an organization can gain considerable competitive
advantage thorough promotional campaigns over their rivals in a timely manner in today’s fierce
business environment. However, there has been a recent trend of deceptive promotion carried out
through exaggerations, overstatements and false claims. Even though it may be beneficial in the
short run, it will be detrimental to an organization on a long run and may even lead to its failure.
Therefore, an organization can have significant benefits from promotional mix if used properly
and efficiently, still it needs to remain true to its customers and avoid its exploitation by
delivering on its promises for positive feedback and sustainable success.
3.2) Plan an advertising campaign for a services industry operation. [M3]
Introduction
I had a chance to work with Mr. Jeevan Raj Baral, my acquaintance, to perform a market
research and open a restaurant based on the research. We were able to select a proper location
i.e., Jamal, and named the restaurant, Himalayan VansaGhar. The research was immensely
helpful in selection of location, target customers, restaurant type, service type and other related
aspects. However, Mr. Baral was keen on planning and implementing an effective advertising
campaign and asked for my help on the subject matter due to my extensive work on the research
and my knowledge from the course. I decided to take on the opportunity as I had financial
incentive and additionally would help me gain useful experience for the future.
Note: As our restaurant is in its initial phase of introduction, I decided to go with extensive
advertising designed to attract new customers through appeal and offers. It should be noted that
the same may not be as effective for other products or services during growth stage, maturity
stage or declining phase of their life cycle.
Current number of visitors

The restaurant has been open and functional for about 2 weeks. The total number of visitors
currently in the restaurant during the weekdays is 90 per day on average and during the weekend
the number is 140 per day on average.
Objective
The objective of the planned advertising campaign for the restaurant is as follows:
1) Increase the number of visitors during the weekdays by 40%.

2) Increase the number of visitors during the weekends by 60%.
3) Create a useful channel and resources for subsequent advertising campaigns in the future.
Available Media
There were number of media available in the country for our planned advertisement campaign.
Newspaper, radio, television, billboard, social media, pamphlets, public vehicles, direct mail,
telephone and website were the media available to us for our advertisement campaign.
Target Audience
As per our marketing research our target customers for the restaurant, were tourists and students.
Hence, our target audience for the campaign were tourists and students as well.
Selection of Media
Proper selection of the right media required careful consideration and observation on the habits
and ongoing trend of our target audience. Radio, direct mail and telephone were deemed to be
ineffective due to their low use by our target as well as due to its ineffectiveness.
Tourist as well as students mostly read English newspaper available in the country. Among those
newspapers, The Himalayan Times and The Kathmandu Post are the most read newspaper by the
students as well as the tourists. We decided to select The Himalayan Times because it is more
popular among the students and is also comparatively cheaper, hence, more affordable to the
students.
Through our observation it was deduced that Kantipur Television is more popular than Nepal
Television or Image Channel for the students, an average family and the tourists alike. The 8pm
news slot is the most watched timing preferable to the average family whereas the 10pm news
slot is an appropriate timing for the students and the tourists.
Billboards are an effective tool of advertising but its location is of prime importance. We thought
the airport area in Sinamangal would be the most appropriate place for the billboard as it would
be in constant view of the incoming tourists and additionally lies in the way to number of
colleges.
Pamphlets can be an important tool of advertisement and can be done individually through
personal visitation in number of places whereas we can select public vehicles that go through
places of our interest.
For social media, due to its present popularity we thought the Facebook and the Youtube would
be the most appropriate media for our campaign. As per the article by Cocotas [2015] ‗Facebook
now boasts 1 billion users globally while Twitter has 200 million. He further mentions that users
of social media have high engagement and social media gives brands a captive audience for
their content.‘ Additionally, we would have to create an eye appealing website and mention it in
all of our selected media to provide additional information as well as to give our customers the
glimpse of our authenticity and glamour.
Estimated Budget
The total estimated budget for the campaign is as follows:
Advertisement in The Himalayan Times = Rs 5000
Advertisement in Katipur TV at 10pm slot = Rs 25,000
Billboard in the main road in Sinamangal (Airport) = Rs 10,000
Printing 500 coloured pamphlets = Rs 8,000
Advertising in 5 local cabs = Rs 15,000
Creating pages and videos for facebook and youtube = Rs 3000
Creation of Website = Rs 9000
Total = Rs 75,000
The total estimated cost for the entire advertisement campaign was calculated to be Rs 75,000.
Available Budget
Due to the recent investment in the inception of the restaurant, Mr. Baral, had limited funding
available for the advertisement campaign. He only had Rs 50,000 available for the entire plan.
However, he promised to provide with additional funds as soon as it was available.
Revised Objective
Due to limitation in budget we were forced to revise our overall objective. We decided to
exclude television advertising from our plan at present which would mean considerable decrease
on our targeted numbers. Our revised objectives were as follows:
Increase the number of visitors during the weekdays by 30%.
Increase the number of visitors during the weekends by 50%.
Preparation of a Slogan
In his book, Creative Advertising, Whittier Charles [1955] says ‗a slogan should be a statement
of such merit about a product or service that it is worthy of continuous repetition in advertising,
is worthwhile for the public to remember, and is phrased in such a way that the public is likely to
remember it.‘ Our restaurant was established on the basis of its authenticity for Nepali food and
its diversity in available ethnic cuisines. Hence, we decided our slogan would be, “Himalayan
VansaGhar: An Authentic Nepali Restaurant. The Place to be for Nepali food.‖The slogan would
be used in all of our advertisements in different media and has a catchy feel to it.
Methodology and Procedure

The methods we applied and the procedures we took for implementation of our advertisement
campaign in different media are as follows:
 Newspaper ( The Himalayan Times)

We decided to place an ad on The Himalayan Times on page 3. The ad would take about 1/3 of
the page and would include the logo along with our slogan and contact information. It also would
include a picture of the restaurant and to attract the students would include the declaration of
25% discount on production of valid student identity card. The official website of the restaurant
was also included along with the guidance map of the location.
 Billboard
The billboard was placed on the main road in Sinamangal which is just outside the airport.
Similar to the ad on the Himalayan Times, the billboard would include the slogan, the address,
contact information, the website, a small map as well as the declaration of 25% discount to the
students.
 Public Transport
We selected 5 local cabs and put banners on them that had the necessary information of the
restaurant. It included our logo, a picture, contact information, our slogan and the offers we
provided. The cabs were selected based on their primary place of operations. 2 cabs were
selected that usually operated on the Thamel area, a primary destination for the tourists while 3
of the cabs selected that operated around the major colleges of the city.
 Pamphlets
We decided to print 500 coloured pamphlets that would include the slogan, logo, address, contact
information as well as brief summary of the menu available. It would also include the declaration
of discount for the students along with other relevant offers.
 Social Media
I personally created the facebook page with relevant information regarding the location, price,
slogan as well as various offers. It also included number of pictures of the exterior and interior
design of the restaurant along with foods and the employees. I shared the page among my friends
and the employees of the restaurant.
In order to create a video for the youtube, I thought it would be effective to make a video of
guest experience and their feedback. I also personally interviewed number of staffs and included
their recommendations. Furthermore, the video included number of shots of prepared meals and
a brief shot of its preparation procedure. The interior layout and design was well documented
giving the viewer a perspective of the restaurant’s cleanliness and maintenance.
Overall, the cost for social media was minimal and hopefully, effective as it can reach out to vast
number of prospective guests.
 Website
We sought the help of an IT student, Miss Deepenti Shrestha from our college in order to prepare
a website for the restaurant. The student was paid for her services and was able to create an
informative and an eye appealing website. It included pictures of the restaurant and its
employees along with various foods and customer experience. All the offers available in the
restaurant was mentioned in the website together with the address and contact information. It
also included the map of the location for easy accessibility.
Conclusion
We were able to plan a well thought out advertisement campaign in order to attract new
customers through implementation of informational and eye appealing commercials in different
media. Though limited by budget, we were able to target our potential customers and succeed in
our campaign by selecting appropriate media. Each media we selected required careful
consideration and we are hopeful in increasing the number of our customers in the upcoming
days.
3.3) Analyze the role that sales promotion and public relations play in
promotional efforts.
Introduction
An organization needs to carry out promotional activities in order to introduce new products in
the market or to protect interest of its already existing products. Carrying out advertisement
campaigns are the prime activities for promotional efforts but it may not always be effective or
practical. Absence of television in the targeted market, government sanctions on advertising a
particular type of product, illiteracy of the population for advertisement in newspapers and lack
of internet infrastructure are some instances when advertising can be ineffective. Moreover,
advertisement campaigns can be costly for an organization and people nowadays also have
distaste for advertisements. ‗Many consumers view advertising as an interruption to what they
would rather be doing—watching their favourite TV program and not a commercial, seeing a
pleasant vista when driving cross-county and not a billboard, listening to a popular song and not
an ad jingle on the radio‘ [Perreault Jr. et. al., 2013]. Sales promotion and public relations acts
as an alternative to advertisements for promotional activities and is relatively cheaper as well.
They can have number of benefits to an organization’s promotional efforts and their
effectiveness varies according to nature of the target market as well as circumstances within an
organization. There are times when sales promotion and public relations is the most effective
form of promotional activity available to the firm.
Role of Sales Promotion in promotional efforts

Shultz et.al. [1998] defines sales promotion as ‗marketing and communicating activities that
change the price/value of a product or a service perceived by the target, thereby generating
immediate sales and altering long term brand value.‘ It creates interest through trial or purchase
by the target customers. Sales promotion is a short-term action, thus, has effect for a short period
only and requires prompt action by the customers. Issuance of coupons, distribution of free
samples and buy-1-get-1 offers are some fine examples of sales promotion that exists in the
industry. Sales promotion is useful for those products which are not properly established among
the customers or which need to be finished immediately. It is extremely useful in food business
as when a food is newly launched it needs exposure and through free sampling customers can get
the taste of the food and at the same time give suggestions for improvement. It also can be used
to boost overall sales by providing packaged deals through reduced offers. Overall, sales
promotion is an essential tool of promotional activity in an organization as some products require
it for effective promotion and increased sales. A sale of overstock items is not as effective
through other promotional activities as it is through sales promotion.
Role of Public Relations in promotional efforts

Harlow[1976] defines public relations as ‗distinctive management function which helps establish
and maintain mutual lines of communication, understanding, acceptance and cooperation
between an organization and its publics; involves the management of problems or issues; helps
management to keep informed on and responsive to public opinion and public interest.‘ A
properly maintained public relations and public image creates publicity and has positive
impression on the mind of the customer about the organization. It helps build reputation of an
organization and when controlled properly can have tremendous impact on the buying decision
of the customer. Public relations and publicity helps in creation of good image, motivates the
staff as it gives them a sense of pride and at the same time influences the buyers while making
decisions. Publicity and maintenance of public relation is cheap for an organization as it does
require budget for media and provides low cost alternative to sales promotion and
advertisements. It has emerged as a more prominent promotional tool in recent years because
advertising is very costly for an organization and customers nowadays try harder and harder to
avoid any kind of advertisements. Advertisement may not be credible but publicity created
through the experience of other customers and through the reviews of experts can be deemed to
be much more credible and is likely to be more influential relatively. When advertisement is
limited by law, unavailability of proper media or simply due to budget constraints public
relations is the only other effective means of promotional efforts and can be even more
influential if used and controlled suitably.
Conclusion
In conclusion, sales promotion and public relations is crucial for the overall promotional effort
and an organization cannot conduct its promotional activities effectively in absence of any one.
Sales promotion encourages the customer to try a new product or entices them to buy the
products through lucrative offers. It is extremely helpful in promotional efforts for items that are
newly launched or the ones that are overstocked. It gives customers a taste of the product and
encourages improvements on it through suggestions. Similarly, public relations and publicity is
the most credible source for promotional efforts because the review of the experts and
suggestions of the customers are major influencing factor for a customer’s ultimate decision. It is
cost effective compared to other forms of promotional efforts and helps an organization build
and maintain a good image on the long run. An organization should use these promotional
activities in proper blend and should not favour one over another. The right selection of the right
activities for promotion depends on number of factors such as the nature of the product, the
nature of the market and the position of the organization.
4.1) Discuss the relevance of market research to services industry operations.
Introduction
Almost all institutions nowadays in all the sectors have R&D department due to the benefits a
research possesses to the organization. Businesses today have to bear with considerable
competitive disadvantage if it fails to research the trends and buying patterns of its targets.
Market research is one of the important aspects of the overall research in an organization and an
institution should implement the market research activities during its inception and equally
during normal course of operations for continual improvement. The customers, the competitors
and the company all play vital role in the research process and a good market research should
clearly identify them before initiating the research.‗ Marketing research focuses on
understanding the customer, the company, and the competition. These relationships are at the
core of marketing research. Companies must understand and respond to what customers want
from their products. However, this relationship is always influenced by competitors and how
their products are received by your market‘ [Albaum and Smith, 2012]. The primary function of
market research in services industry operations is to identify the preference of the customers
based on number of factors which can have various subsequent benefits for an organization to
capitalize on. It can give an organization, ideas to outrival its competition as it helps to study the
market and the opportunities available there. It is also significant in giving an institution an idea
about customer demands and trends which can be a critical foundation to base one’s operations
upon. Furthermore, it helps in problem identification and determining the effectiveness of the
current marketing plan in place by studying customer satisfaction level and gives an organization
a means for further improvement.
Market research for identification of current customer demands and shift in trends.
Technology has made world a global village and allowed easy access of information which
wouldn’t be possible in the past. People in Nepal today can know about the trends and eating
habits of the people in New York and London in an instant and this has resulted in constant shift
in trends all over the world. An organization has to be able to determine the shift in trends and
adapt itself accordingly as per the present business environment in order to succeed. Social
media is another important phenomenon that has caused the change in the knowledge, nature and
attitude of the consumers. ‘As social media websites expand and access to the internet and online
distribution channels becomes more accessible, a new breed of confident empowered and savvy
travellers is emerging‘ [Deloitte, 2015]. Market research allows the study and determination of
the shift in trends and can help an organization fulfil the demands of the ever changing people in
the present day market. For instance, in context of Nepal the demand for fine dining and high
end restaurants is increasing due to western influence and the operators of the restaurant in the
industry has to change accordingly and meet the demands to sustain in the present market.
Market research for determination of customer preference to set target market.

To ensure regular sale of products and regular visits by the customers it becomes necessary to
know their preference and base one’s operations upon those preferences. The taste of different
customers, their financial ability and location preference is different and the same product or
service may not work for all. Generally, rich people place emphasis on quality while poorer
people place emphasis on affordability. Market research is crucial in determining the individual
preference of the particular market segment and helps an organization target the particular
market for maximum result. Target setting increases the effectiveness of overall marketing and
also helps a firm chose the nature of its operations based on the result of the research. Moreover,
it ensures optimum utilization of resources into a select market for efficient performance and
persuasive marketing strategy.
Market research to determine rival’s weakness and seek opportunities.

Performance of market research in the industry allows an organization to study the reach of the
rivals and their strengths along with their weaknesses. When market research is done customer
loyalty towards other organizations and their reasons can be determined. This allows an
organization to study the influence of the rivals and helps organization develop counteractive
measures to outperform the competition. It also is helpful in determining the untapped market in
the society through the response of the masses and creates opportunity wherever possible. For
example, while opening a new restaurant, performance of market research helps an organization
determine the features and a service provided by the rivals and therefore is beneficial in devising
strategies and offers to outperform them. It also gives them knowledge about the most profitable
section in the market segment and allows targeting them in particular for increased revenue.
Market research for problem identification

Lack of sale of a product or a service, ineffectiveness of the advertising campaign and decrease
in customer value perception are some major problems in services industry that needs immediate
solution for minimizing losses. Market research is helpful in identifying the problems that may
arise in an institution and gives an organization means for its effective solution. In doing so, it is
helpful in minimizing losses and creating positive value.
Market research for continual improvement of the marketing plan and increasing its
effectiveness.
Market research is an ongoing process and should be performed periodically for continual
improvement. Periodic performance of market research helps measure its effectiveness and
furthermore, ensures improvement through customer response and feedbacks. A separate
research can be conducted in the market to measure the effectiveness of the previous research,
hence, it is an ongoing process and an organization should keep on performing research activities
for continued improvement. Continual changes and improvements make sure that the research
remains effective and it additionally improves customer experience through consideration of
their feedbacks and suggestions.
Conclusion
In conclusion, market research is extremely relevant in services industry operations as it
accomplishes number of functions and is hugely advantageous to and organization. In the present
day business environment, an organization cannot expect to succeed without performance of
some sort of research activity. In services industry, market research is helpful in determining
customer preference and thus for target setting which in turn increases the effectiveness of the
overall marketing plan and enhances business performance. It also studies the change in trend
patterns and quips a firm with adaptability and sustainability which is a key for success on the
long run. Furthermore, it is an ongoing process and is useful in determining rival weaknesses,
creating opportunities and for continual improvement in the future.
4.2) Undertake market research for an appropriate product or service. [D2]
Overview
I had a chance to be acquainted with Mr. Jeevan Raj Baral, who has worked in services industry
for more than 15 years, both abroad and in the country. At present, he is working as a chef for a
well renowned hotel and has remained in that position for more than 5 years. Mr. Baral is
looking to set up his own restaurant and he has the resources as well as the experience to do so.
We decided to conduct some research of the potential market before starting his enterprise and
he seemed to be ecstatic for getting my help. I thought it would be a good opportunity for me to
gain some valuable experience and knowledge in the field helping me build a strong career.
Objective
As mentioned by Latham et al. [1981], ‗goals affect performance by directing attention,
mobilizing effort, increasing persistence and motivating strategic development.‘ Hence, to begin
our research we have to have a set aim first based on which we can devise our method for the
research and proceed accordingly. The objectives we set that we can strive to achieve through the
completion of our research are as follows:
1) To identify the preferences of the customers regarding various factors such as location,
timing, taste, price, quality etc.
2) To eventually establish a good restaurant according to the preferences of the customers
and gain competitive advantage over the rivals.
Research Question
The research questions, on basis of which we designed our marketing research in order to answer
the questions that would fulfill our objectives are as follows:
1) What is the current preference of the customers in regards to their demand and
expectation from a restaurant in the locality? In other words, what is the location, the
price, the quality and the type of the product they would prefer in a restaurant and how
often would they go there?
2) How to succeed in the present competitive business environment and what are advantages
that can be gained over the rivals?
Estimated Budget
Due to limitation of time as well as budget we thought it would be effective to conduct our
research through observation and a survey. The estimated cost for printing and stationeries would
amount to Rs 3000. Transportation charge and other related expenses for observation would
amount to Rs 5000. Thus, the total estimated budget for the research was Rs 8000.
Mr. Baral was willing to bear the required expenses giving me the permission to proceed.
Methodology for information collection

As written by Albaum and Smith [2007] ‗there are 3 data sources: primary data, secondary data
and commercial data. Primary data is collected by the researcher and can be verbal or non-
verbal. Secondary data is collected from another‘s research while commercial data is sold by
syndicated services.‘
We thought primary data would be the most reliable and it would be cost effective as well as
practical to conduct our research through survey and observation. It would also save us a lot of
time as our result and report submission should be time bound.
 Survey
To conduct a survey, we decided to prepare and print questionnaires and distribute it to our
potential customers, eventually collecting all the data to make a critical decision.
In order to get accurate and fair representation, we thought it would be effective to segregate our
participants into students, workers, tourists, middle income family and high income family.
A total of 1000 questionnaires were printed, out of which 200 were separated for students, 300
for tourists, 200 for offices, 150 for families with middle income level and 150 for families with
high income level.
 Observations
To conduct research through observation, we needed to personally travel to various restaurants in
different locations and dine there. We were required to make a note of their price, quality,
services offered, mood, environment as well as incoming customers. The outcome of our
observations was to give us basis for comparisons between restaurants and thus, give us some
useful ideas to run ourselves competitively and more effectively.
Sample of prepared questionnaire:

Note: Please answer the questions honestly and provide suggestions whenever possible.
 What sort of food would you prefer to have in a restaurant? (Tick multiple answers if you
prefer many)
o Italian Food
o Nepali Food
o Fast Food
o Indian Food
o Mexican food
o Other ( _______ )
 How frequently do you go to restaurants?

o Once a week
o Twice a week
o Thrice a week
o Four times a week
o More than 5 days a week
 How much money are you willing to spend on a single visit?
o Under Rs 100
o Rs 100 to Rs 200
o Rs 200 to Rs 300
o Rs 300 to Rs 400
o Above Rs 400
 What is your preferred location?

Answer: _________________
 What type of services do you prefer for delivery?

o Self Delivery
o Home Delivery
o Carry out
o Assisted service with uniformed staffs
 What is your preferred timing for visiting a restaurant? ( Tick multiple answers if you
want)
o Early Morning
o Morning
o Afternoon
o Evening
o Midnight
 What is your preferred mode of payment?

o Cash
o Debit Cards / Credit Cards
o Electronic Payment
o Cheque
 What types of drinks do you prefer?

o Sodas
o Juices
o Alcoholic Beverages
o Mock tails
 What sort of music do you prefer while dining?

o Pop
o Rock
o Classical
o Jazz
o Other _________
 What type seating arrangement would you prefer in a restaurant?

o Round Table
o Square Table with 4 seats
o Square Table with 2 seats
o Tables with protective seats for infants.
Procedure
 For Survey
We distributed 200 questionnaires in 2 colleges in Kathmandu (ISMT College and NIST), both
in different locations. We had to ask for help from the management which we thankfully
received and were able to collect out data through the questionnaires.
To collect the data from the tourists we thought it would be eventful to go to the airport as well
to Thamel in Kathmandu which is a place where majority of the tourists stay. 50 questionnaires
were filled in person at the airport. We left the remaining 150 questionnaires at the front desk in
various hotels in Thamel which were eventually filled and returned to us.
To gather data from office workers, we walked into different offices in 3 different locations and
requested them to answer the questionnaires.
To get the data from the families with middle income level we distributed 150 questionnaires
among our friends who were helpful and subsequently distributed it among their neighbors.
We decided to go to the posh areas of New Road and Baneshwore in Kathmandu in person to
collect our data from the families with high income level.
 For Observation
To conduct our research though observation, we visited different restaurants in different
locations and in some cases, even dined there. We were able to take a look at their menus and
make a note of their prices, varieties, quality and other factors. We were also able to make an
assessment of their environment, ambience, mood and extra services offered. Moreover, this
allowed us to take a look at the nature and attitude of their customers giving us some valuable
information regarding customer preference and requirement.
We were able to make additional observation and assessment though internet, advertisement in
different media, past experiences as well as though experience of close relatives.
Findings
 Findings through Survey

1) Preference of food
More than 80 percent of students preferred fast food. However, some of the students
suggested that they would prefer Italian or Nepali food if the service was faster and
carry out service were included.
65 percent tourists preferred to have Nepali food and 20 percent preferred Italian
food.
75 percent office workers preferred fast food and few suggested home delivery
service.
50 percent families from middle income level preferred Italian food, 30 percent
preferred Nepali food and remaining preferred other.
40 percent families from higher income preferred Italian food, 35 percent preferred
Nepali food and 20 percent preferred Mexican food.
2) Frequency of Visit
Majority of students, tourists and office workers visited restaurants more than 5 days
a week.
On average, majority of people from middle income families visited restaurants twice
a week.
Families from higher income level visited restaurants 4 days a week on average.
3) Preferred Timing
Most of the students preferred afternoon time from 12 to 2 pm.
Office workers preferred time from 1 to 2 pm.
Tourists preferred the time from 6 in the evening up until midnight.
Families from middle income level preferred the evening time from 6 till 9.
Families from higher income level preferred the evening time as well from 5 till 8.
4) Paying Capacity
On Average, students were willing to pay less than Rs 100 for their meal on a single
visit.
Office workers were willing to pay between Rs 100 to Rs 200.
Tourists were willing to pay more than Rs 500 for their meal.
Families from middle income level were only willing to pay less than Rs 200 for their
meal.
Families from higher income level were willing to pay more than Rs 500 for their
meal.
5) Preferred Location
Most of the students preferred the location close to their colleges.
Most of the office workers preferred the location close to their offices. However, they
wouldn’t mind if home delivery was available.
Most of the tourists preferred the location around Thamel.
Data for families from middle income level was varied as they preferred location
close to their homes.
Most of the families from higher income level preferred central location such as
Durbar Marg, New Road, Thamel and Jamal.
6) Preferred method of payment
On average as a whole, around 35 percent people preferred cash payment. 60 percent
preferred card payment and the remaining preferred other mode of payment.
7) Preferred Drink
Around 40 percent of students preferred hot drinks, 20 percent preferred juice and 30
percent preferred soda.
Majority of the office workers preferred soda.
Around 60 percent tourist preferred alcoholic beverages and 20 percent preferred
mocktails.
50 percent families from middle income level and 62 percent families from higher
income level preferred to have alcoholic beverages.
8) Preferred music.
Majority of student preferred rock and pop music.
Most of the tourists preferred classical music.
Families from middle income level preferred pop music.
Most families from higher income level preferred jazz music.
9) Preferred system of delivery
Majority of students preferred carry out.
Most of the office workers preferred home delivery.
Majority of tourists and families from higher income level preferred fine dining.
Majority of families from middle income level preferred self delivery.
 Findings through observation
Through our observation we found out that the average cost for fast food in different restaurants
for an item was around Rs 70. We also found out that the customers were willing to pay around
Rs 300 per visitation in a restaurant that served three course meals with assisted services.
However, the number of restaurants that had assisted services was less in number and the quality
of service was also average with room for significant improvement. Almost all the restaurants we
visited only had one method of payment through cash and our survey reflects that majority of
people want secure method of payment in the form of cards. It was also our observation that all
restaurants we visited didn’t have any promotional offers, discounts or special deals.
Conclusion
1) Since, the frequency of visit is higher for tourists, students and office workers, the
restaurant should focus on them.
2) Tourists and families from higher income level are willing to pay more and want three
course meals with assisted services whereas students and office workers want foods
cheaply and faster. However, students and office workers will consider authentic food if
they have carry out services and home delivery.
3) Most of the tourists prefer Nepali food and we can provide varieties of Nepali food from
different ethnicities such as Newar, Gurung, Sherpasetc in a good environment with a
well maintained standard of quality. To focus on the students and the office workers,
there are some Nepali foods such as Chatamari, Bara, Momo etc. which can be prepared
quickly and we can add home delivery and carry out services to attract them.
4) Frequency of visit for families from middle income level is low and their willingness to
pay is average.
5) Preferred timing for different group is different so we can operate according to the timing
preference of the potential customers.
6) It can be concluded from our observation, that if we introduce method of payment other
than cash, the customers will feel secured.
7) Since, the promotional offers provided is limited on other businesses we can attract
number of customers through promotional offers, discounts and package offers.
8) Through our research it can be concluded that to attract more tourists we need to operate
in the periphery of Thamel. However, it should be kept in mind that the location we
choose is a central location in relation to its accessibility to students and office workers.
9) In today’s market according to our research we need to include alcoholic beverages to
cater to the needs of the customers.
10) Our menu should be designed in such a way that the price for an individual on a single
visit does not exceed Rs 300 or is less.
Eventual Decision
Mr. Baral seemed to be happy with the research and decided to follow through it and open a
restaurant based on our research. He decided to name it ‘Himalayan VansaGhar’ which has a
distinct Nepali feel to it. As per our research the restaurant would be located in Jamal which is a
central hub of the city and is accessible to all and is in the periphery of Thamel so as to attract
the tourists as well. Since, students are frequent visitors but they are incapable of paying more he
thought it would be a good idea to introduce 25 % discount for students to attract them. In the
present context of Nepal, additional promotional offers would be beneficial, so he offered to
provide one free drink to anyone on their birthdays. Additionally, he thought it would be a good
idea to provide 20% discount to offices if the total amounted to more than Rs 1000. The
restaurant would serve Authentic Nepali food which is diverse in itself due to ethnic diversity of
Nepal and the meal would be three courses with well assisted quality service. Moreover, the
restaurant would additionally provide carry out services and home delivery to meet the demand
of the students and the office workers. He also thought that the introduction of card payment
system was a good idea which gave some competitive advantage as it made the customers feel
safe. The operations and allocation of employees could be based on the preferred timing of the
guests. The afternoon time would be focused on delivery and carry out services whereas the
evening time would be focused on well seated assisted service.
4.3) Analyze the suitability of different media for marketing an appropriate

product or service.
Introduction
I had the opportunity to work with my acquaintance and performed a market research and
opened a restaurant based on our research. We even planned an advertisement campaign and
implemented it adequately. While planning an advertisement campaign we had number of
options of media but we had to be selective in choosing it due to budget constraints, its overall
ineffectiveness on our target audience and the phase of our product. Communication through use
of media is necessary to overcome the limitation of geography and give knowledge of existence
of product or service to the prospective buyers. ‗Communication can take place through
traditional media such as newspapers, magazines, radio, television, and billboards, but also
through media such as computers, fax machines, cellular phones, pagers, and wireless
appliances‘ [Kotler, 2003]. The media we chose eventually was based on its overall
effectiveness for our targeted audience. While undertaking a market research setting our target
audience and basing our operations on them ultimately determined the media selection process
for us. Therefore, suitability of the media is directly determined by your selection of the target
audience. It should be mentioned that the budget also was a crucial element to be considered
during the selection process. Here, I shall analyse the suitability of different media for our
advertisement campaign of the restaurant and why it affected my ultimate decision due its overall
effectiveness.
Our target audience

Based on our research, our primary target audience were students and tourists. Middle income
families and office workers were our secondary target audience. The analysis of suitability of
media will be primarily based on its effectiveness on our target audience.
Suitability of radio
In context of Nepal, radio can be an effective media in rural areas where it can reach the masses
for small budget but however the use of radio is rapidly declining in urban areas. Our operation
is based on the urban location of Kathmandu, hence, for our purposes of advertising of the
restaurant, radio can be deemed to be ineffective.
Suitability of newspaper
Newspaper can be an effective marketing tool for the literate masses. Within the print media,
different newspapers can be used to target different audiences based on their reading habit. We
chose the Himalayan Times, a Nepal based English newspaper for advertising, as our primary
audience was students and tourists and use of the mentioned newspaper is popular among them.
Overall the selection of the Himalayan Times for our advertisement campaign can be deemed to
be effective. However, we could have chosen a Nepali newspaper as well to target the middle
class families and office workers as its use is high among them. Although suitable for general
household and office workers, Nepali newspapers could not be used due to budget restrictions.
Suitability of television
Television allows advertising in different time formats, hence, is useful to reach almost all the
targets of the market. In Nepal, most general households tune in to television during 8 pm time
slot while tourists and students prefer 10 pm timeslot due to the airing of the English news.
Additionally, majority of people young and old love sports such as football and cricket and the
advertising during the timeslot can be most effective to reach the mass numbers. As per the press
release by Indian Super League [2014], ‗during the opening week of the ISL 170 million Indian
viewers tuned in the television making it a milestone in the history of Indian sport.‘ In Asian
countries including Nepal, housewives are the individuals that ultimately determine the buying
decision in the house. So, influencing their behaviour can be very crucial for the sales and
promotions of the product of the organization. Television and proper use of its timeslots would
have been an excellent choice for promotional activities of our restaurant but however, we were
limited due to budget and could not use the media.
Suitability of billboard
The important element to be considered during the use of billboard for our advertisement
campaign was the selection of its placement. Billboard can be effective only when its placement
is appropriate. We placed the billboard in the airport area where tourists arrive into the city and it
is also a place of commute among the students as they see the billboard while travelling to
colleges. Hence, the billboard was an effective tool of promotion for our purposes as its
placement through selection of prime and central location could entice an audience and gave
them relevant information about the institution.
Suitability of Internet and Social Medias
The cost for use of social media and internet was minimal but it was effective nevertheless for
our promotional activities of the restaurant. The use of internet and social media is growing
rapidly as almost all the population today are technologically able. It is even more popular
among the students at present times and our primary target being students; it was even more
relevant and useful. We were also able to provide useful information to the tourists through our
website, as tourists these days rely heavily on online resources while travelling. Overall, we were
able to use internet and social media effectively for a minimal price, therefore, its use was
appropriate for our purposes.
Conclusion
In conclusion, there were number of media available to us for the promotional activity of our
restaurant. However, we were forced to choose only select few due to budget constraints and
uselessness of the given media for the given circumstance. Our selection was also dependent on
its effect and influence on our target audience. Radio was ineffective because almost all our
audience didn’t use the media. Television though extremely effective was unavailable to us due
to the limitations of the budget. We couldn’t use paper media as effectively as we would have
liked but billboard was suitable for our purposes and social media was effective as well as cheap.
4.4) Evaluate the implementation of the marketing plan for an appropriate

product or service. [D3]
Introduction
We conducted a marketing research and opened a restaurant named ‘Himalayan VansaGhar’
based on our research. We were even able to plan and perform a successful advertisement
campaign for promotional activities of our research. In order to open a restaurant and carry out
our marketing activities we needed a definite marketing plan and implement it effectively.
Creation of successful marketing plan needs research performance of the market and formulation
of relevant strategies. ‘Marketing planning involves choosing market strategies that will help the
company attain its overall strategic objectives. A detailed marketing plan is needed for each
business, product, or brand‘ [Armstrong and Kotler, 2014]. For creating our marketing plan we
needed proper budgeting, competitor observation and study of consumer preference.
Our Marketing Plan and it’s basis

Our primary objective was to open a successful restaurant in the present market environment
based on customer preference. To attain our objective we needed a detailed plan that would
provide us with framework required for our marketing activities. We first needed to study
consumer attitude and their preference so that we would be able to open a business that is
relevant to the available consumers. We also needed to study competitor position in order to be
able to compete in the hostile market. Study of consumer behaviour and competitor position was
achieved through our marketing research. Furthermore, we needed to initiate different marketing
activities to influence the behaviour of our target group. Therefore, our marketing plan involved
performance of marketing research and initiation of different activities that we thought were
essential to influence the decision of our customer. Conducting marketing activities needed
careful consideration of individual components of the marketing mix that would affect our
prospective customers. Selection of proper place, pricing, promotional activities, relevant
product development, selection of right staffs and selection of proper physical feature and layout
of the building were some key elements we had to consider for carrying out effective marketing
activities. Market research was helpful in determining our targeted customer’s preference and
our marketing activities were based on fulfilment of those preferences.
In short, our marketing plan lasted from the undertaking of the research to performance of
various activities that would strengthen our position in the market and influence our customer’s
ultimate decision in selecting the business. Budgeting of both research and activities was
essential for successful implementation of our overall plan.
Implementation of our marketing plan

We had to implement our marketing plan on step-by-step basis. Carrying out research activities
for determination of customer preference of the current market and the position of the competitor
was the first step in implementation of our marketing plan. Market research was followed by
execution of marketing activities for strengthening our position and influencing the customers we
targeted.
1) Carrying out marketing research

Firstly, proper budgeting was required to carry out our marketing research. Lidia, T.G. [2014] in
her journal mentions ‘budgets are management tools universally recognized for their ability to
support planning and efficient management of resources and activities in economic entities.‘
The primary objective of the research was to determine customer preference regarding the food,
price, location, timing and services in a restaurant. Study of competitor position and their
methodology of operation was another objective to be fulfilled through the research. Due to
limitation of budget and time, our data collection method was restricted to questionnaires and
observation. We prepared a questionnaire and distributed it in number of locations to number of
people from different backgrounds so as to get accurate representation of the masses. For
observation we considered ongoing trends and habits of the competitors as well as that of the
customers through personal experience. For further observation we visited number of restaurants
in various locations and studied their attitude and nature of their operations. The research would
have been more accurate and thorough if we had been able to perform individual interviews and
surveys. Nevertheless, the result we obtained from the research was extremely helpful in
targeting particular segment and performing subsequent marketing activities.
2) Execution of various marketing activities
The result we obtained from our marketing research was the determining factor of our marketing
activities. Our marketing activities were based on fulfilment of the expectation of the customers
we targeted. The various elements we considered for our marketing activities and its eventual
implementation is listed as follows:
2.1) Selection of proper place of business

Our research indicated that the population preferred central location in Kathmandu. Tourists and
students were our primary targets and we deemed Thamel area would be an appropriate place of
business due to it being a tourist area and also due to location of number of colleges around the
periphery. Eventually we were able to select Jamal as our place of operation which is close to
Thamel and centrally located. A proper area can in itself be an effective marketing tool because
of its accessibility.
2.2) Pricing strategies we used

In order to attract more students we offered them 25 % discount and declared it in our
subsequent advertisement campaigns. We further decided to provide number of offers and
discounts in special events such as birthdays and anniversaries to motivate our customers to use
the service and increase our sales. Our pricing strategies are limited at present and there are
further improvements to be made.
2.3) Selection of products and services

The research we undertook was crucial in determining the type of product and service we chose.
We were able to determine the demand for authentic Nepali food in the market through our
research and it impacted our eventual decision in selecting it. Ultimately, we marketed ourselves
as an authentic Nepali food provider in our promotional campaign which created positive vibe
for us while marketing. We established assisted service for the customers and due to demand of
students for take-out service we implemented it as well. It was helpful for our market
strengthening and brand establishment.
2.4) Promotional activities we implemented

We were able to select an appropriate slogan and devise an eye appealing informative campaign
for our purposes. We used different media available to us for our advertisement campaign. In a
week following the advertisement campaign, the number of customers increased by 20 % and
40% on weekdays and weekends respectively. The increase in the number is progressive, hence,
our plan can deemed to be effective. The number can be estimated to increase significantly in the
upcoming days. However, the organization needs to expand its advertisement campaign and at
the same time should sustain its ongoing activities in advertising. Newspaper, billboard,
pamphlets, social media, internet and public vehicles were the media we used for the campaign.
However, we were unable to use television which would have been appropriate and effective for
our purposes due to financial limitations. We could also have used other newspapers to promote
the restaurant and target our secondary customers. Furthermore, we failed to use sales
promotions and public relations which are critical for promotional activities. Nevertheless, our
promotional activity should keep on going in the future and we must include other resources and
tools if we plan to succeed.
2.5) Selection of staffs

As Mr. Baral the owner of the restaurant was immensely experienced in the field, he was able to
select experienced staffs to render services. He was also able to conduct training programme
which was helpful in improving the services of the staffs and provide them with relevant
knowledge and guidance. Our staffs were already creating buzz due to the quality of their service
and our overall marketing activity was highly successful as we had positive feedbacks. The
brand of the institution was starting to develop and it had positive brand value in the market.
2.6) Physical structure

Our place of business was earthquake proof and due to recent earthquake in Nepal, it was
immensely useful in creating buzz and enhancing the image of the organization.
Further suggestions for improved effectiveness of overall implementation of marketing

plan
 Budget restrictions were major problem for our research. As revenue starts coming into
the firm, it should start doing surveys and interviews as well for customer feedbacks and
additional information which can be helpful for further improvements.
 Budget should also be made available in the future for advertisement in television as it
can be considered as the most effective tool for the overall advertising campaign.
 To target secondary audience i.e. middle income families, advertisement should be placed
in a Nepali newspaper in the future.
 Sales promotions and public relations can be an effective tool for promotional activities
and should be used to increase overall effectiveness of the promotional campaign.
 More pricing strategies should be developed and implemented for influencing customer’s
decision in selecting the service and also to increase further sales in the institution.
 Staffs should be regularly trained and appraised and there should be a proper blend of
experience while staffing.
 Customer’s suggestions and feedbacks should be regularly collected and should form a
basis for future marketing activities.
Conclusion
In conclusion, we had a definite marketing plan for the initiation of the restaurant and we were
able to implement it successfully. Our marketing plan included marketing research as well as
number of activities we executed to influence the customer decision for selection which was
helpful in strengthening our position in the market. However, there were number of limitations in
our plan and its implementation and we should improve on it in the future. Marketing is an
ongoing process and an institution should keep on improving it through customer suggestions
and their reaction.
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Marketing In Hospitality 2015

1.1) Discuss concepts of marketing for a relevant services industry. [M1]

Marketing: Past and Present

Marketing in Hospitality Industry: A Brief Introduction

Customer Relationship Management

1.2) Assess the impact of the marketing environment on the industry.

External or Macro-environmental factors

Micro-environmental or internal factors

 Intermediaries and Suppliers

1.3) Evaluate the relevance of consumer markets in the industry.

Why is it important to study and determine consumer buying behaviour in services

Advantages to be gained from consumer market in the industry.

Market segmentation is helpful in determining untapped markets, thus, creating

Market segmentation is helpful in minimizing losses during launch of a new product or

2.1) Assess the importance of components of marketing mix to the industry.

Value based pricing

3.1) Evaluate the role of promotional mix.

Role of promotional mix in attracting new customers.

Gaining competitive advantage through promotional mix.

Misuse of promotional mix: Deceptive Marketing and False Advertising.

3.2) Plan an advertising campaign for a services industry operation. [M3]

Current number of visitors

1) Increase the number of visitors during the weekdays by 40%.

Advertisement in The Himalayan Times = Rs 5000

Advertisement in Katipur TV at 10pm slot = Rs 25,000

Billboard in the main road in Sinamangal (Airport) = Rs 10,000

Printing 500 coloured pamphlets = Rs 8,000

Advertising in 5 local cabs = Rs 15,000

Creating pages and videos for facebook and youtube = Rs 3000

Creation of Website = Rs 9000

Increase the number of visitors during the weekdays by 30%.

Increase the number of visitors during the weekends by 50%.

Methodology and Procedure

 Newspaper ( The Himalayan Times)

Role of Sales Promotion in promotional efforts

Role of Public Relations in promotional efforts

4.1) Discuss the relevance of market research to services industry operations.

Market research for determination of customer preference to set target market.

Market research to determine rival’s weakness and seek opportunities.

Market research for problem identification

4.2) Undertake market research for an appropriate product or service. [D2]

Methodology for information collection

Sample of prepared questionnaire:

 How frequently do you go to restaurants?

 What is your preferred location?

 What type of services do you prefer for delivery?

 What is your preferred mode of payment?

 What types of drinks do you prefer?

 What sort of music do you prefer while dining?

 What type seating arrangement would you prefer in a restaurant?

 Findings through Survey

4.3) Analyze the suitability of different media for marketing an appropriate

Our target audience

Suitability of Internet and Social Medias

4.4) Evaluate the implementation of the marketing plan for an appropriate

Our Marketing Plan and it’s basis

Implementation of our marketing plan

1) Carrying out marketing research

2.1) Selection of proper place of business

2.2) Pricing strategies we used

2.3) Selection of products and services

2.4) Promotional activities we implemented

2.5) Selection of staffs