Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Advertising campaign wikipedia , lookup
Direct marketing wikipedia , lookup
Multi-level marketing wikipedia , lookup
Marketing strategy wikipedia , lookup
Target audience wikipedia , lookup
Marketing mix modeling wikipedia , lookup
Marketing plan wikipedia , lookup
Green marketing wikipedia , lookup
Street marketing wikipedia , lookup
II 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Organizational Buyer Behavior of Group Market Foreword: “The ideal salesperson in the company meetings segment isn’t a salesperson in the traditional sense, but rather the problem-solver.” - Robert II C. Mackey- 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 OBJECTIVES After reading this chapter, you should be able to: • Understand the organizational buying process. • Identify and discuss the importance of the participants in the organizational buying process. • Identify the major influences on organizational buyers. • List the eight stages of the organizational buying process. • Identify and describe the group markets in the hospitality industry. II 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Organizational Buyer Behavior of Group Market Don Walter • Don Walter is a member of the Convention Liaison Council’s Hall of Leaders. II – he received this honor because of his contribution to the meetings & convention business over the last thirty years • Don has purchased or influenced the purchase of nearly $100 million in hospitality & travel products. • To Don, honest, straightforward negotiations are the important factor in negotiating with a hotel. – “if both the meeting planner and the hotel sales manager are up front with each other, it saves hours of unnecessary negotiation for each party.” Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Organizational Buyer Behavior of Group Market Don Walter • Walter does not buy on price alone and avoids properties that appear desperate for his business. II – he claims that often these hotels have financial problems, which result in staff turnover and understaffing • You may have to deal with several people because of the turnover problem. – when the meeting is held, service is poor, meals take longer and setup changes are difficult to accomplish • If the meeting does not go off well, the savings in cost seems trivial in comparison to the damage done to the sponsoring association’s reputation. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Organizational Buyer Behavior of Group Market Don Walter • When negotiating, Walter looks for a fair deal. – he expects the hotel to make money, but also expects good service and overall value II • He observes employees during a site visit to get an idea of the service he can expect for his meeting. – when he sees an employee pick up a gum wrapper, it indicates the employees have pride in their hotel • He likes to go back to a hotel where he sees the same faces he saw last year. – low turnover and promotion from within give him a good feeling about a hotel Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Organizational Buyer Behavior of Group Market Don Walter • After signing a contract with the hotel, he likes to deal with one person II – Don brings his own contract, he does not use the hotel’s • Walter said that requirements of the Americans with Disabilities Act (ADA) should be a concern to both hotels and meeting planners. – compliance ensures that everyone wanting to attend the meeting has access to the meeting – failure to comply could result in lawsuits from attendees against both the meeting sponsor and hotel 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Organizational Buyer Behavior of Group Market Don Walter • Don Walter provides an example of the tremendous purchasing power of an organizational buyer, and provides some insights into what is important to meeting planners and association executives II – they want good service at a fair price with no surprises – when they need to make changes during the event, they expect the hotel or convention hall to be supportive • In most hotels and many food-service operations, organizations account for a large percentage of sales. – business markets differ from consumer markets in structure & demand, nature of the buying unit, types of decisions, and the decision process involved Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Organizational Buying Process Market Structure and Demand • The American Marketing Association holds more than twenty conferences annually. II – the value of this account approaches $1 million – a delegate also spends about $850 on transportation and $425 on entertainment, plus spending in local restaurants • Hyatt and Marriott share the majority of the AMA’s conference business, with Marriott’s share close to three thousand room-nights a year. – each organizational customer can deliver tens of thousands of dollars’ worth of business to the hotel, airlines, and the destination’s economy Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Organizational Buying Process Market Structure and Demand • Organizational demand is derived demand, or a function of the businesses that supply the hospitality & travel industry with meetings, special events, and other functions. • AMA plans & hosts conferences because members, marketing managers, suppliers, and educators, have attended past conferences on these topics. II – if a particular conference receives poor attendance, the AMA drops it from future schedules • Ultimately, demand for association member products determines the demand for association meetings. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Organizational Buying Process Market Structure and Demand • Through good environmental scanning, marketers can identify emerging industries, companies, and associations, screening for good business partners. • Hotel managers need to understand the financial health of the corporations & associations they serve. II – if clients fall on hard times, managers need to look for healthy industries to replace the lost business, before it affects the revenue per available room (REVPAR) • Compared with consumer purchases, a business purchase usually involves more buyers and a more professional purchasing effort. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Organizational Buying Process Market Structure and Demand • Corporations that frequently use hotels for meetings may hire their own meeting planners. • Professional meeting planners receive training in negotiating skills and belong to associations such as Meeting Planners International, which educates its members in the latest negotiating techniques. • A corporate travel agent’s job is to find the best airfares, rental car rates, and hotel rates. II – hotels must have well-trained salespeople to deal with well-trained buyers, creating thousands of sales jobs 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Organizational Buying Process Market Structure and Demand • Once the meeting is sold, the account is turned over to a convention service manager who works with the meeting planner to make sure the event is produced according to the meeting planner’s expectations. • Outside the hotel, jobs relating to meetings include corporate meeting planners, association meeting planners, independent meeting planners, and convention and visitor bureau salespersons. II 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Organizational Buying Process Types of Decisions and the Decision Process • Organizational buyers face more complex buying decisions than consumer buyers. • Their purchases often involve large sums of money, complex technical features, economic considerations, and interactions among many people at all levels. • The organizational buying process tends to be more formalized & professional purchasing effort. II – the more complex the purchase, the more likely it is that several people will participate in the decision-making • In the organizational buying process, buyer and seller are often very dependent on each other. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Participants in the Organizational Buying Process The Buying Center • The decision-making unit of a buying organization is sometimes called the buying center: – Users - those who use the product or service – Influencers - directly influence the buying decision but do not themselves make the final decision – Deciders - select product requirements and suppliers – Approvers - authorize proposed actions of deciders or buyers – Buyers - have formal authority for selecting suppliers and arranging the terms of purchase – Gatekeepers - have the power to prevent sellers or information from reaching members of the buying center Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab II 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Participants in the Organizational Buying Process The Buying Center • Buying centers vary by number & type of participant, so salespersons calling on organizational customers must determine: – – – – II who are the major decision participants? what decisions do they influence? what is their level of influence? what evaluation criteria does each participant use? • When a buying center has multiple participants, the seller may not have time/resources to reach them all. – smaller sellers concentrate on reaching key buying influencers and deciders Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Participants in the Organizational Buying Process The Buying Center • Most deciders like to feel in control of the purchasing decision, so going over a decider’s head & working with the boss will be resented. • In most cases the boss will leave the decision up to the decider, and the ill will created by not dealing with the decider directly will result in him or her choosing another company. • Larger sellers use multilevel, in-depth selling to reach as many buying participants as possible. – their salespeople virtually “live” with their high-volume customers Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab II 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Major Influences on Organizational Buyers Introduction • Organizational buyers are subject to many influences as they make buying decisions, and some vendors assume the most important influences are economic. • A study of buyers in ten large companies concluded that emotions & feelings play a part in the decision. • In reality, organizational buyers commonly respond to both economic and personal factors. – where there is substantial similarity in supplier offers, price becomes an important determinant – when competing products differ substantially, buyers are faced with many decision variables other than price Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab II 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Major Influences on Organizational Buyers Introduction • The various influences on organizational buyers may be classified into four main groups: II – environmental, organizational, interpersonal, individual Figure 7-1 Major influences on business buying behavior. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Major Influences on Organizational Buyers Environmental Factors • Organizational buyers are heavily influenced by the current and expected economic environment. • Factors such as the level of primary demand, the economic outlook, and the cost are important. • In a recession, companies cut their travel budgets, whereas in good times, travel budgets are usually increased. II 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Major Influences on Organizational Buyers Organizational Factors • Each organization has specific objectives, policies, procedures, organizational structures, and systems related to buying. • The hospitality marketer has to be as familiar with them and wants to know… – – – – II how many people are involved in the buying decision? who are they? what are the evaluation criteria? what are the company’s policies & constraints on the buyers? 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Major Influences on Organizational Buyers Interpersonal Factors • The buying center usually includes several participants, with differing levels of interest, authority, and persuasiveness. II – hospitality marketers are unlikely to know the group dynamics taking place during the buying decision process • Salespeople commonly learn the personalities and interpersonal factors that shape the organizational environment and provide useful insight into group dynamics. 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Major Influences on Organizational Buyers Individual Factors • Each participant in the buying decision process has personal motivations, perceptions, and preferences. • Age, income, education, professional identification, personality, and attitudes toward risk all influence the participant in the buying process. II – buyers definitely exhibit different buying styles • Hospitality marketers must know their customers and adapt their tactics to known environmental, organizational, interpersonal, and individual influences. 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Organizational Buying Decisions Introduction • Organizational buyers do not buy goods and services for personal consumption. II – they buy hospitality products to provide training, reward employees and distributors, and to provide lodging for their employees • Eight stages of the organizational buying process have been identified and are called buyphases. – this model is called the buygrid framework 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Buygrid Framework Stage 1 - Problem Recognition • The buying process begins when someone in the company recognizes a problem or need that can be met by acquiring a good or a service. II – problem recognition can occur because of internal or external stimuli • Internally, a new product may create the need for a series of meetings to explain the product to the sales force. • Externally, the buyer sees an ad or receives a call from a hotel sales representative who offers a favorable corporate program. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Buygrid Framework Stage 2 - General Need Description • Having recognized a need, the buyer goes on to determine the requirements of the product and to formulate a general need description. • The corporate meeting planner works with others to gain insight into the requirements of the meeting. II – they determine the importance of the price, meeting space, sleeping rooms, food and beverage, and other factors • Alert marketers can help buyers define their companies’ needs and show how their hotel can satisfy them. 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Buygrid Framework Stage 3 - Product Specification • Once the general requirements are determined, the specific requirements for the meeting can be developed. • Information often requested includes availability of water, ceiling heights, door widths, security, and procedures for receiving and storing materials prior to the event. • A salesperson must be prepared to answer their prospective client’s questions about their hotel’s capabilities to fulfill the product specification. II 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Buygrid Framework Stage 4 - Supplier Search • The buyer now conducts a supplier search to identify the most appropriate hotels. II – the buyer can examine trade directories, do a computer search, or phone familiar hotels • Hotels that qualify may receive a site visit from the meeting planner, who eventually develops a short list of qualified suppliers. 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Buygrid Framework Stage 5 - Proposal Solicitations • Once the meeting planner has drawn up a short list of suppliers, qualified hotels are invited to submit proposals. II – hotel marketers must be skilled in researching, writing & presenting proposals • Proposals should be marketing oriented, not simply technical documents. – they should position their company’s capabilities and resources so that they stand out from the competition – many hotels have developed videos for this purpose 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Buygrid Framework Stage 6 - Supplier Selection • In this stage, members of the buying center review the proposals and move toward supplier selection. II – they conduct an analysis of the hotel, considering physical facilities, ability to deliver service, and the professionalism of its employees • In general, meeting planners consider the following attributes in making their selection of a location: – – – – sleeping rooms & meeting rooms food & beverage check-in/checkout & billing procedures staff Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Buygrid Framework Stage 6 - Supplier Selection (cont.) • The buying center may attempt to negotiate with preferred suppliers for better prices & terms before making the final selection. • There are several ways the hotel marketer can counter the request for a lower price. II – dates can be moved from a high demand period to a need period for the hotel – menus can be changed. • The marketer can cite the value of the services the buyer now receives, especially where services are superior to competitors Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Buygrid Framework Stage 7 - Order-Routine Specification • The buyer writes the final order with the chosen hotels, listing technical order-routine specifications of the meeting. II – the hotel responds by offering the buyer a formal contract • The contract specifies cutoff dates for room blocks, date when hotel will release the room block for sale to other guests, and minimum guarantees for food and beverage functions. • Many hotels & restaurants have turned what should have been a profitable banquet into a loss by not having or enforcing minimum guarantees. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 The Buygrid Framework Stage 8 - Performance Review • The buyer does a postpurchase performance review of the product to determine if the product meets the buyer’s specifications and if the buyer will purchase from the company again. • It is important for hotels to have at least daily meetings with a meeting planner to make sure everything is going well and correct things that did not go well. • This manages the buyer’s perceived service & helps avoid a negative postpurchase evaluation by the buyer. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab II 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Introduction • One of the most important types of organizational business is group business II – it is important for marketing managers to understand differences between a group and a consumer market – group business is often more sophisticated and requires more technical information than the consumer market • Many group markets book more than a year in advance, and during this time, cognitive dissonance can develop. – marketers must keep in contact with the buyer to assure them that they made the right decision in choosing the seller’s hotel Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Categories • The four main categories of group business are conventions, association meetings, corporate meetings, and SMERF. II – Social, Military, Educational, Religious, and Fraternal organizations • Conventions attract large numbers, but meetings occur much more frequently than conventions. – – – – there are about ninety-five meetings for each convention fifteen hundred people attend the average convention 165 people attend the average association meeting 78 people attend the average corporate meeting Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Considerations • When choosing a hotel, an important consideration for a is whether the hotel can house the participants. II – most hotels have the potential of attracting hundreds of small meetings, where larger hotels can attract conventions • Successful hotels know which groups to attract, how to use group business to fill need dates & how to sell groups on the hotel’s benefits rather than just price. 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets CIC - APEX • The Convention Industry Council (CIC) is made up of thirty-four member organizations that represent both buyers and suppliers to the meetings industry. II – they recently developed the Accepted Practices Exchange (APEX), a set of standards and best practices to all parties involved in the creation and implementation of a meeting • APEX’s event specifications provide a checklist for planning an event, and its glossary brings a common meaning to terms used in the meetings industry. – APEX is a great tool for those involved in selling or planning meetings Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Conventions • Conventions are a specialty market requiring extensive meeting facilities. II – usually the annual meeting of an association, & include general sessions, committee & special-interest meetings • Hotels with convention facilities, such as the Chicago Hyatt can house small and midsized conventions. • Conventions that use a major facility, such as the Jacob Javitts Convention Center in New York, often have tens of thousands of delegates. – called citywide conventions because hotels throughout the city house their delegates Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Conventions • There are almost 14,000 conventions held each year in the US, with delegates staying an average of 3.6 days & spending an average $1,500 per event. II – of this amount about $350 is spent on lodging • Associations usually select convention sites two to five years in advance, with some large conventions planned ten to fifteen years before the event. • Some associations prefer to have their conventions in the same city year after year. – others move to a different area of the country each year 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Conventions • A convention can be a major source of income for the sponsoring organization. II – registration fees from attendees and sales of exhibition space in the trade show are major sources of revenue • The price that can be charged for exhibition space is related to the number of attendees. – an association looks for locations that will be both accessible and attractive to members 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Conventions • Convention planners listed the following as the most important factors in choosing a destination: II – availability of hotels &facilities – distance from attendees; ease & costs of transportation – climate; recreation, sights & cultural activities • The most important attributes of the hotel: – – – – – meeting rooms & sleeping rooms food & beverage quality exhibit space & support services negotiable rates; billing procedures check-in/checkout; staff assignment; previous experience Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Conventions • Food quality is very important to convention planners. – attendees will talk about exceptional banquets, out-ofthe-ordinary receptions & unique coffee breaks – poor food and service can generate negative feelings about the convention among the participants II • Support services must be available when needed. – a nonfunctioning DVD player must be repaired/replaced quickly to ensure the presenter’s flow is not interrupted • Billing procedures are important to planners. – meeting planners want a bill that is understandable, accurate, and delivered in a timely manner Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Convention Bureaus • Convention bureaus are nonprofit marketing organizations that help hotels sign conventions & meetings. II – often supported by a hotel or sales tax & run by chambers of commerce, visitor bureaus, or city/county governments • A hotel relying on meeting business for a significant portion of its occupancy should have a good working relationship with the convention bureau. – which includes active membership in the organization 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Association Meetings • Associations sponsor many types of meetings. – regional, special-interest, educational, and board meetings II • 71,000 associations, 92% of which hold meetings, creating 227,000 association meetings annually. – generating meeting business valued at $70 billion • Important destination attributes for an association meeting planner are availability of hotel & facilities, ease of transportation, distance from attendees, and transportation costs. – unlike conventions, climate, recreation & cultural activities are not as important as the meeting itself is the major draw Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Association Meetings • In selecting a hotel, the association meeting planner looks attributes similar to the convention planner. II – except for exhibition space • For the association meeting planner, food and beverage are the most important attributes. • Membership in the American Society of Association Executives (ASAE) is beneficial for hotels actively pursuing association business. • Members attend association meetings voluntarily, so the hotel should work with meeting planners to make the destination seem as attractive as possible. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Corporate Meetings • A corporate meeting is a command performance. – employees are directed to attend without choice II • Because corporations do not have to develop and implement a marketing plan to gain attendees, they often plan meetings with a few weeks’ lead time. • About 800,000 corporate meetings are held with an average expenditure exceeding $36,000 per meeting. – corporate meetings are smaller than association meetings • When seeking business from corporations, a hotel manager must understand who has the responsibility for booking meetings. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Corporate Meetings • The corporation’s major concern is for a productive meeting that accomplishes the company’s objectives. II – types of corporate meetings include training, management, planning and the incentive meeting • To a corporate meeting planner, the most important attributes in the choice of a destination are the availability of hotels, ease of transportation, transportation costs, and distance from the attendees. • Hotels interested in capturing and retaining corporate meeting business must make sure that meeting rooms are adequate and set up properly. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Corporate Meetings • Hotel salespeople must develop an understanding of the client’s corporate culture to gain insight into benefits the hotel can offer. II – some companies feel meetings should be austere, rather than lavish – others view meetings as a time for employees to relax & enjoy themselves, a well-deserved break • Companies that believe meetings should educate & rejuvenate employees, and build enthusiasm toward the company are willing to spend more money on food & beverage, entertainment, and hotel facilities. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Small Groups • Although small in terms of number of participants, thousands of small meetings are held every month. • Hotels & chains have developed special packages for small meetings, often overlooked by large hotels. II – upscale hotels such as the L’Ermitage in Beverly Hills go after executive meetings where expense is not a problem – Sheraton has also developed executive conference centers for board meetings, strategic planning sessions & training 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Small Groups II • Simplifying small meeting arrangements is critical because those who plan small meetings are often not meeting planners. 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Incentive Travel • Incentive travel, a unique subset of corporate group business, is a reward participants receive for achieving or exceeding a goal. II – for both individual and team performance • A hotel salesperson selling incentives must be able to help their client justify the expenditure. – percentage of sales of the attendees is an excellent way • Because travel serves as the reward, participants must perceive the destination & hotel as special. – climate, recreational facilities, and sightseeing opportunities are high on an incentive planners’ list Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 II See this feature on page 186 of your textbook. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets SMERFs • SMERF stands for Social, Military, Educational, Religious, and Fraternal organizations. II – median 485 nights at a budget of $180,000 – in the US, over 50,000 religious organizations have group travel programs • The individual pays for the majority of the functions sponsored by these organizations, and sometimes the fees are not tax deductible. • Participants usually want a low room rate & often find food & beverage within the hotel too expensive. – SMERFs can be flexible to ensure a lower room rate Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets SMERFs • Because attendees are price sensitive, a challenge is to get them to book within the room block. II – due to Internet searching for lower rates at the same hotel • Hotels often provide concessions like free rooms or a free or reduced food & beverage function based on the number of room nights in the group’s block. – if the block does not materialize, the meeting planner is responsible for extra charges • SMERFs provide good off-peak filler business. – those new to hotel sales often start with SMERF markets 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Segmentation of Group Markets by Purpose • Group markets also can be broken into the purpose of the meeting, and Table 7–1 on page 188 shows a matrix describing some of the critical sales decision variables for these types of gatherings. • This matrix reflects the general nature of sales decision variables within the group market. II – exceptions can and do exist 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Group Business Markets Restaurants as a Meeting Venue • Restaurants are designing their space to take advantage of meetings and meetings of 50 people or fewer can be a great source of business. • A room off of the main room that can be closed off for meetings gives the restaurant the option of using it as part of the public dining space on Saturday night or a meeting room during a weekday. II – meetings held in space of 700 square feet or less (20 x 35 feet) increased by over 25 percent in the past two years • Many times they are held at off-peak times, such as during a weekday. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Dealing with Meeting Planners Negotiating • When negotiating with meeting planners, it is important to try to develop a win-win relationship. II – meeting planners like to return to the same property • Discussions over price can drive the planner and hotel sales executive apart, or bring them together – a negotiating technique is to determine group requirements in detail and work out a package based on needs & budget • Some planners try to negotiate every item separately, starting with the room rate, then they choose a $65 banquet and try to negotiate the price to $45. – every line item becomes a point of contention Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Dealing with Meeting Planners Negotiating • A consultative approach is much more effective. – if the hotel knows the planner wants to spend $50 for dinner, the chef can develop alternatives in this range, the hotel can produce the meal at a profit and sell it for $50 – the hotel gains a profitable meeting, and the meeting stays within the planner’s budget II • If attendees are able to get work done at the conference they will stay longer. – the hotel can offer a small meeting room with business services, including Internet access, computers & printers – this can be a low-cost item to the hotel that has a high value to the meeting planner Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Dealing with Meeting Planners Negotiating • Hotel salespersons must remember that most group rates are noncommissionable II – if the rates are to be commissionable, it should be determined during the negotiation process • Meeting planners sometimes turn meetings over to travel agents, who book about 5 percent of all corporate meetings. – if the planner does so without understanding the rate is noncommissionable, problems can arise when the travel agent tries to collect a commission 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Dealing with Meeting Planners Negotiating • It is also common to give one complimentary roomnight for every fifty room-nights that the group produces—another point of negotiation. • A smaller meeting room the hotel will not be able to sell during a proposed meeting can be used in the negotiation process as a boardroom or a space for the meeting manager to work. • The hotel salesperson must look for items that will create value for the meeting planner without creating costs or sacrificing revenue for the hotel. II 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Dealing with Meeting Planners Negotiating • Many associations have a president, elected from the membership, and a professional executive, often called the executive vice president. II – the executive vice president usually sets up the meeting or supervises a meeting planner • It is important for the salesperson to find out who is involved in the decision-making process, officially and unofficially. – gatekeepers can give useful insights into the decisionmaking process within the organization 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Dealing with Meeting Planners Negotiating • When the vice president of sales asks a junior salesperson to organize a sales meeting, the salesperson is usually unsure of how to proceed. • Meeting administrators often know the business as well as the hotel salesperson. II – salespeople should listen to the administrator to understand his/her requirements • Sometimes they know exactly what they want and just need a quote according to their specifications. – if this is the case, trying to alter their specifications arbitrarily can appear unprofessional and lose business Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Dealing with Meeting Planners Negotiating • Most meeting planners maintain a history of the group for the purpose of planning future meetings. II – a salesperson can gain valuable information by asking questions about past conferences • In addition to information volunteered by the meeting planner, the salesperson should interview hotels that hosted the conference in past years. – this can provide insight into room pickups, banquet attendance, past problems & what members enjoyed 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Dealing with Meeting Planners Negotiating • Meeting planners want their calls returned the same day they are received. • When they ask about availability of meeting space, they expect a response the same day and a complete proposal in five days. • Most meeting planners want their bill within one week of the event; 25% want it within two days. • Planners feel hotel management should empower the convention service manager to solve their problems. – they do not want to wait while the convention service manager checks with a superior Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab II 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Dealing with Meeting Planners Prefunction Meeting • A most important aspects of creating a successful function is a prefunction meeting between the hotel staff and the meeting planner before the function. – Accounting should be at the meeting to get acquainted with the function to make sure billing meets expectations – the Bell Captain should know if a gratuity is included – the concierge needs to know the meeting has open nights with no banquets to allow the concierge to set aside tables at local restaurants – hotel staff that will be receiving questions about the event and the schedule should be briefed – reservations agents should know the names of the group’s VIPs and who should get early check-in privileges Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab II 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Corporate Accounts and Travel Managers Corporate Rates • A nongroup form of organizational business is the individual business traveler. II – most hotels offer a corporate rate, intended to provide an incentive for corporations to use the hotel – most hotels offer it now to any businessperson who requests the corporate rate • To provide an incentive system for heavy users, hotels developed a second set of corporate rates. – the contract rate is a negotiated rate, usually 10% to 40% percent below the hotel’s rack rate and often includes benefits besides a discounted rate Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Corporate Accounts and Travel Managers Corporate Rates • The corporate business traveler is a sought-after segment, as while the corporate contract rate is a discounted rate, it is higher than the group rate. II – the business traveler is also on an expense account and makes use of the hotel’s restaurants & business facilities • Companies that would have not considered putting their people in an economy brand a few years ago are now using budget and economy-brand hotels. – budget/economy hotels now have a 34.5% market share – attributed to upgraded amenities found in economy hotels and businesses needing to cut costs to remain competitive Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Corporate Accounts and Travel Managers Corporate Rates • Larger companies have travel management programs run by the company or in-house branches of a travel agency that negotiate corporate hotel contracts. • In addition to developing hotel contracts, the travel managers set per diem rates, specifying the amount a company traveler can spend on food & beverage. II – often at different levels, with the per diem amount increasing as one moves up in the corporation • It is important to find out a company’s per diem rates to determine if the hotel is in the right price range. – and what level of manager the hotel can expect to attract Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 Corporate Accounts and Travel Managers Corporate Rates • Some corporations use in-house travel agencies, or in-plants, that also represent other corporations, providing the advantage of negotiating leverage. • A business represented through an in-plant may have only 100 room-nights a year in New York. II – the travel agency represented by the in-plant may service ten companies with 1,500 room-nights in New York • The agency can negotiate a rate based on the 1,500 room-nights & pass it along to individual companies. – the hotel compensates in-plants by straight commissions, monthly fees, or a combination of a fee and commission Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 KEY TERMS • Buying center. All those individuals and groups who participate in the purchasing and decision making process and who share common goals and the risks arising from the decisions. • Convention. A specialty market requiring extensive meeting facilities. • Corporate meeting. A meeting held by a corporation for its employees. • Derived demand. Organizational demand that ultimately comes from (derives from) the demand for consumer goods. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab II 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 KEY TERMS • General need description. Stage of the industrial buying process in which a company describes the general characteristics & quantity of a needed item. • Incentive travel. A reward that participants receive for achieving or exceeding a goal. • Order-routine specification. The stage of the industrial buying process in which a buyer writes the final order with the chosen supplier(s), listing the technical specifications,quantity needed, expected time of delivery, return policies,warranties, etc. II 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 KEY TERMS • Organizational buying process. The decision making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. • Performance review. The stage of an industrial buying process in which a buyer rates its satisfaction with suppliers, deciding whether to continue, modify, or drop the relationship. II 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 KEY TERMS • Problem recognition. The stage of the industrial buying process in which someone in a company recognizes a problem or need that can be met by acquiring a good or a service. • Product specification. The stage of an industrial buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item. • SMERF. Social, Military, Educational, Religious & Fraternal organizations - specialty markets with a common price sensitive thread. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab II 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 KEY TERMS • Supplier search. The stage of the industrial buying process in which a buyer tries to find the best vendor. • Supplier selection. The stage of the industrial buying process in which a buyer receives proposals and selects a supplier or suppliers. II 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 EXPERIENTIAL EXERCISES Try the Following ! • Talk with someone who travels for business. Ask them if they can choose their own hotel and airline when they travel for their company. II – if they can choose their own hotels and airlines, ask if they have any restrictions or guidelines. – if they are not able to choose their own hotels and airlines, ask if they have any input into where they stay. • How would this information help you market travel products to their organization? 7 Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 INTERNET EXERCISES Try This ! Support for this exercise can be found on the Web site for Marketing for Hospitality and Tourism, www.prenhall.com/kotler • Go to the Internet site of a travel organization. Do they have a separate section for organizational or group purchases? • If so, how does the information in this section differ from their consumer site? • If they do not have a separate site, go to another organization until you find one that has a separate site for group or organizational purchases. Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens tab II 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458 END II CHAPTER END Marketing for Hospitality and Tourism, Fifth Edition By Philip Kotler, John Bowen and James Makens 7 © 2010 Pearson Higher Education, Inc. Pearson Prentice Hall - Upper Saddle River, NJ 07458