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Marketing for Hospitality
and Tourism
Kotler, Bowen, Makens and Baloglu
INTRODUCTION: MARKETING FOR HOSPITALITY AND
TOURISM
Chapter 1
Chipotle Mexican Grill
Key Components of
Chipotle’s Vision
Learning Objectives
1.
2.
3.
4.
5.
Understand the relationships between the world’s hospitality
and travel industry.
Define marketing and outline the steps in the marketing
process.
Explain the relationships between customer value and
satisfaction.
Understand why the marketing concept calls for a customer
orientation.
Understand the concept of the lifetime value of a customer
and be able to relate it to customer loyalty and retention.
Purpose of a Business
Create &
Maintain
Customer
Orientation
Satisfied &
Profitable
Customers
What is Marketing?
Marketing is the process by which companies create
value for customers and society, resulting in strong
customer relationships which capture value from the
customers in return.
Marketing Mix
Product
Price
Place
(Distribution)
Promotion
(Sales & Advertising)
Tourism Marketing
Hospitality
Industry
Tourism
Marketing
Travel
Industry
The Marketing Process
•The Marketing Process
•In the first four steps, companies work to understand
consumers, create customer value, and build strong
customer relationships
•In the final step, companies reap the rewards of creating
superior customer value
•By creating value for customers, companies are able capture
value from customers in the form of sales, profits, and longterm customer equity.
Core Customer & Marketplace
Concepts
Needs, Wants &
Demands
Exchanges &
Relationships
Marketing
Offerings
Value &
Satisfaction
Markets
Needs, Wants & Demands
Needs
Demands
Wants
Marketing Offerings
Customer wants and
needs are fulfilled
through some
combination of
tangible and
intangible products
and services
Value & Satisfaction
Customer
Value
Customer
Satisfaction
Customer
Expectations
Exchanges & Relationships and
Markets
MARKET
Exchange
vs.
Relationships
Marketing Management Orientations
Management
Orientations
Societal Marketing (cont.)
Society
(Human welfare)
Societal
Marketing
Concept
Consumers
(Want Satisfaction)
Company
(Profits)
15
Customer Relationship Management
Customer
Value
Customer
Satisfaction
Engaging Customers
CustomerEngagement
Marketing
ConsumerGenerated
Marketing
Lifetime Value of the Customer

Losing a customer means losing more than a single
sale.
 It
means losing the entire stream of purchases that the
customer would make over a lifetime of patronage

A company can lose money on a specific transaction
but still benefit greatly from a long-term
relationship
 This
is one of the reasons successful companies empower
employees to resolve customer complaints
Building the Right Relationships with
the Right Customers
A company should develop customer relationships selectively: Figure out which customers are
worth cultivating because you can meet their needs more effectively than anyone else.
• The company can classify customers according to their potential profitability and manage its
relationships with them accordingly. One classification scheme defines four relationship
groups based on potential profitability and projected loyalty: strangers, butterflies, true
friends, and barnacles; see above [Figure 1–5 in the text]. Each group requires a different
relationship management strategy.
• “Strangers” show low potential profitability and little projected loyalty. There is little fit
between the company’s offerings and their needs. The relationship management
strategy for these customers is simple: Don’t invest anything in them.
• “Butterflies” are potentially profitable but not loyal. There is a good fit between the
company’s offerings and their needs. However, like real butterflies, we can enjoy them
for only a short while and then they’re gone.
Building the Right Relationships with
the Right Customers (cont.)
•
“True friends” are both profitable and loyal. There is a strong fit
between their needs and the company’s offerings. The firm wants to
make continuous relationship investments to delight these customers and
nurture, retain, and grow them. It wants to turn true friends into “true
believers,” those who come back regularly and tell others about their
good experiences with the company.
•
“Barnacles” are highly loyal but not very profitable. There is a limited fit
between their needs and the company’s offerings. An example is smaller
bank customers, who bank regularly but do not generate enough returns
to cover the costs of maintaining their accounts. Like barnacles on the hull
of a ship, they create drag. Barnacles are perhaps the most problematic
customers. The company might be able to improve their profitability by
selling them more, raising their fees, or reducing service to them.
However, if they cannot be made profitable, they should be “fired.”
The Changing Marketing Landscape
The Digital
Age
Sustainable
Marketing
Changing
Economic
Environment
Rapid
Globalization
Co-Creation
The Sharing
Economy
Key Terms
Consumer-Engagement Marketing
Customer Expectations based on
fosters direct and continuous customer
involvement in shaping brand
conversations, experiences, and
community.
past buying experiences, the opinions
of friends, and market information.
Consumer-Perceived Value the
customer’s evaluation of the difference
between all the benefits and all the
costs of a market offering relative to
those of competing offers.
Customer Equity the discounted
lifetime values of all the company’s
current and potential customer.
Customer Satisfaction the extent to
which a product’s perceived
performance matches a buyer’s
expectations.
Customer Relationship Management
(CRM) involves managing detailed
information about individual customers
and carefully managing customer
“touch points” in order to maximize
customer loyalty.
Customer Touch Point any occasion
on which a customer encounters the
brand and product—from actual
experience to personal or mass
communications to casual observation.
Key Terms (cont.)
Customer Value the difference
Exchange the act of obtaining a
between the benefits that the customer
gains from owning and/or using a
product and the costs of obtaining the
product.
desired object from someone by
offering something in return.
Demands human wants that are
backed by buying power.
Digital and Social Media Marketing
using digital marketing tools such as
Web sites, social media, mobile apps
and ads, online video, e-mail, and blogs
that engage consumers anywhere, at
anytime, via their digital devices.
Hospitality Industry made up of
those businesses that offer one or more
of the following: accommodation,
prepared food and beverage service,
and/or entertainment.
Human Need a state of felt
deprivation in a person.
Human Want the form that a human
need takes when shaped by culture and
individual personality.
Key Terms (cont.)
Lifetime Value (LTV) the lifetime
Marketing Management the art and
value of a customer is the stream of
profits a customer will create over the
life of his or her relationship to a
business.
science of choosing target markets and
building profitable relationships with
them.
Marketing the art and science of
finding, retaining, and growing
profitable customers.
involved in marketing analysis,
planning, implementation, and control
activities.
Marketing Concept the marketing
Marketing Mix elements include
management philosophy that holds that
achieving organizational goals depends
on determining the needs and wants of
target markets and delivering desired
satisfactions more effectively and
efficiently than competitors.
product, price, promotion, and
distribution. Sometimes distribution is
called place and the marketing situation
facing a company.
Marketing Manager a person who is
Key Terms (cont.)
Product Concept anything that can be
Relationship Marketing involves
offered to a market for attention,
acquisition, use, or consumption that
might satisfy a want or need. It includes
physical objects, services, persons,
places, organizations, and ideas.
creating, maintaining, and enhancing
strong relationships with customers and
other stakeholders.
Production Concept holds that
customers will favor products that are
available and highly affordable, and
therefore management should focus on
production and distribution efficiency.
Purpose of a Business to create and
maintain satisfied, profitable customers.
Selling Concept the idea that
consumers will not buy enough of an
organization’s products unless the
organization undertakes a large selling
and promotion effort.
Share of Consumer the portion of the
customer’s purchasing that a company
gets in its product categories.
Key Terms (cont.)
Societal Marketing Concept the idea
that an organization should determine
the needs, wants, and interests of
target markets and deliver the desired
satisfactions more effectively and
efficiently than competitors in a way
that maintains or improves the
consumer’s and society’s well-being.
Transaction consists of a trade of
values between two parties;
marketing’s unit of measurement.
Value Proposition the full positioning
of a brand—the full mix of benefits
upon which it is positioned.