The Utility of Mobile Marketing in the Hospitality Industry:
An Evidence Based Approach
What is Marketing?
Categories of Demand
Case Study Questions and Data Collection
Issues in Application of Mobile Marketing
Mark Twain once quipped that, “Many a small thing has been made large by the right kind of advertising. The truth of this maxim is as true in today’s marketing reality as ever. Marketing can be understood primarily as a business philosophy that puts the customer first. From this perspective, the primary goal of hospitality businesses should be to create and retain satisfied customers. This concept proposes that satisfying customers’ needs and wants should be at the center of an organization’s decision-making process. Professional marketers believe that this customer focus is the responsibility of everybody in the organization. Adopting this philosophy requires a total management commitment to the customer, and companies that pursue this approach can be described as having a customer orientation.
One new area to better serve the customer through the distribution of information and discounts is mobile marketing. With the proliferation of mobile device the hospitality industry is going through a gradual transformation as it adapts to this new technology. Literature on the benefits of this technique can be extremely beneficial to industry efforts. Furthermore, an awareness of the issues that must be addressed can help ease the adoption of this novel technique. This paper will present extensive interviews and data analysis performed of the hospitality industry’s use of the technology to elucidate key themes regarding mobile marketing.
What is Marketing?
Originally a market was a meeting place where people could buy and sell produce, and of course this type of market still exists today. In modern societies a ‘market’ is much more complex, but retains the core principles of bringing together buyers and sellers with common interests. This modern concept of the market is based on groups of people who have similar needs and wants (actual and potential buyers or consumers), and companies that aim to satisfy the consumers’ needs and wants better than their competitors (an industry). Needs can range from the basic requirements for survival — food, shelter, safety — to much more complex social needs, such as belonging and recognition (Singh, 2011). Wants are how different people choose to satisfy their needs, and are shaped by culture and personality. Hence people with similar needs, for example the need to travel for a family event and stay overnight, can have different wants — some may stay with relatives while others book their own hotel accommodation. Obviously, a major limitation on how people can satisfy their wants is what they can afford (Gleanster, 2011).
Consumers have to make buying choices based on their own resources or buying power. Consumers will often buy the best bundle of benefits provided by a product, for the price that can be afforded. The combined purchase decisions of all the individuals buying a product (or service) is described as market demand. Market demand is normally measured using two criteria: 1) The number of units sold, which is a reflection of the number of people buying the product or service; this is called the volume and 2) How much people have paid for the product; this is called the value. Individuals can choose different ways to satisfy similar needs (Nester and Alt, 2003). Not everyone wants the same bundle of benefits, and this creates sub-markets, or market segments, within the overall market. In hospitality markets, luxury, mid-market and budget market segments represent different bundles of benefits sought by different groups of customers. Over a period of time the volume and the value of market segments can increase or fall, depending upon a wide range of factors. Market supply can also be measured, and this is called the industry capacity. In the hotel market, the number of hotels and bedrooms in an area is called the market capacity. If the number of hotels and bedrooms is increasing, because new hotels or bedroom extensions have been built, then the market capacity increases. In the hospitality industry, market supply is often categorized under the same headings as market demand segments; so the luxury, mid-market and budget classifications are used to describe the different types of operations serving those market segments. Other ways of categorizing hospitality market supply include: Tourist board, motoring, or other, organization ratings for hotels and restaurants (e.g. star rating classification) Purpose of travel (leisure or business) Niche markets (youth action adventure holidays, conferences or gourmet food). The level of market demand and the amount of industry capacity is a crucial factor underpinning the profitability of hospitality: When market demand is consistently high and industry capacity low, the hospitality business should be operating at high capacity and be profitable. When demand fluctuates and industry capacity is high, the hospitality business will be operating in a highly competitive environment and profitability will rise and fall (Rask and Dholakia, 2000).
Categories of demand
One way to think about marketing is to view it as the art and science of managing customer demand. Negative demand exists where consumers positively dislike a product — e.g. An unpopular food or drink product. The marketing response is to encourage demand by educating consumers about the positive features of, or benefits from, the product. You can often witness free tastings of food and drink products in supermarkets and wine shops, which enable potential customers to see, taste and buy the product. Where there is no demand, the marketing task is to create demand. Raising awareness by advertising and public relations activity to demonstrate a product’s positive attributes will help to educate consumers, and encourage them to sample the product (Brown and Chalmers, 2003). Latent demand means that demand would exist if there were a product/service available to meet consumer needs. The development of domestic short breaks as a hotel product was originally based on consumers’ increasing affluence and available leisure time. Where demand is falling, the task is to revitalize demand. This situation can occur when a product/service is beginning to lose its appeal. Marketers need to research the reasons why the product no longer meets consumers’ needs, reformulate the offer and re-launch the product to stimulate consumer interests and revitalize demand. Irregular demand can be described in hospitality markets as the seasonality of demand. In these situations, companies strive to develop marketing strategies to synchronize demand over the high and low seasons, often using price-led promotions. Full demand occurs when actual demand matches the desired demand, and the marketing task is to maintain current demand. In hospitality markets full demand rarely occurs, since competitors are likely to enter attractive markets and disturb the equilibrium. If there is too much (or overfull) demand, the service operation will not be able to cope and there is likely to be considerable customer dissatisfaction. The hospitality marketer will aim to reduce demand either by increasing prices or by managing the booking/queuing process to prevent overfull demand. A long-term solution to overfull demand is to increase capacity by building more bedrooms or extending the seating area in a restaurant, but managers need to be confident that overfull demand will be sustained. Unwholesome demand can occur when illegal activities such as drug taking, gambling or prostitution are taking place on the hospitality premises. Management clearly has a legal and ethical duty to try and inhibit or destroy unwholesome demand; however, this can be a difficult situation when customers are willingly involved (Krum, 2010). In short, a proper appreciation of the nature of demand is critical in establishing effective marketing.
Market demand in hospitality can be broadly described under four key headings: 1) Business travel demand includes all those journeys business people make to meet customers and suppliers, and attend conferences, exhibitions and seminars. Business travel does not include the daily journeys people make when commuting to work; 2) Leisure travel demand includes journeys where people travel away from home for amusement, entertainment or relaxation — for example, holidays, weekend breaks, or same-day visits; 3) Domestic travel demand includes all the travel generated within a country by people living in that country — so, for example, the domestic demand for business travel in Australia is all business journeys taken in Australia by people living in Australia and 4) International travel demand includes all the journeys generated to a country from people living in other countries (Brown and Chalmers, 2003). France is one of the most popular tourist destinations, and attracts international visitors from all over the world. Some types of travel do not fit easily into these broad categories. People often combine business and holidays in the same trip. However, these are convenient descriptions which tourist and hospitality organizations use. In short, hotel marketing exists to meet the reasonable demands of customers in order to make profits in a series of hotel operations and sales activities. Hotel marketing’s aim is to meet the reasonable demands of the customs and the ultimate goal is get more profit…