Download 2. THE MICE BUSINESS Learning Objectives:

Meetings, Incentives, Conventions and Exhibitions (MICE)
2.
THE MICE BUSINESS
Learning Objectives:
□ understand the type of business MICE represents
□ understand the need for MICE
□ understand how MICE relates to the tourism and hospitality industry
□ find out about the players within the MICE sector
The term MICE (Meetings, Incentives, Conventions and Exhibitions)
represents a sector of tourism which includes business events and activities.
Travellers attending MICE activities have a purpose beyond leisure tourism,
and are in fact business travellers. These business travellers are connected
to different sectors of the tourism and hospitality industry through their MICE
activities. (See Figure 1.) Think of business travellers who travel to a city to
attend an exhibition. They will need food, drinks, shopping, entertainment,
transport, accommodation and more.
Attendee
BUSINESS TRAVEL
Conferences
Meetings
Incentives
Conventions
&
Exhibitions
Conventions
ACTIVITY
Tourism
Hospitality
INDUSTRY
Figure 1 Nature of MICE
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Meetings, Incentives, Conventions and Exhibitions (MICE)
4.
SECTOR OVERVIEW—MEETINGS
Learning Objectives:
□ Understand the meaning of each sector of MICE
□ Explain what meetings are
□ Identify the types of meetings
In general, MICE events are events and activities that involve attendees who
share a common interest and gather in a place. The place for the gathering
needs to be a venue arranged before hand. The venue will provide space and
facilities necessary to satisfy the needs of those who attend the gathering.
We can further explain the gatherings by their different formats:
M
I
C
E
=
=
=
=
Meetings (Corporate)
Incentives
Conventions (Association)
Exhibitions
4.1. Meetings
Meetings bring people together in one place for the purposes of sharing
information and discussing and solving problems. Meeting attendance can
range from ten to thousands of people. During a meeting, there will usually be
food and beverage served. Meeting times vary depending on the meeting type.
Most of the time, meetings refer to
corporate meetings which are held by
companies in the following ways:
□ Board meetings – Meetings of the
board of the directors of a
corporation, usually held annually
□ Management Meetings – The
managers from different regions of
a corporation meet when
necessary to make decisions for
the corporation
Photo 3 A meeting
□ Shareholder Meetings – Investors who own a share in a company meet
quarterly
□ Training Seminars – A company conducts these to train employees
when needed
□ Meetings with partners, suppliers and clients – A gathering to discuss
business deals, usually held with little prior notice
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Meetings, Incentives, Conventions and Exhibitions (MICE)
□ Product launches – Usually a meeting with clients, the public, and
journalists and reporters when new products are announced on the
market
□ Strategic planning – Managers meeting with employees to discuss the
future of the company
□ Retreats – The entire company staff spends a day or two together to
participate in team-building activities, training seminars and strategic
planning sessions
Activity 4.1
Visit Hong Kong Tourism Board website (www.discoverhongkong.com) and
find out from the MICE event calendar about what meetings have been
scheduled to be held in Hong Kong for the coming year.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
5.
SECTOR OVERVIEW – INCENTIVES
Learning Objectives:
□ Explain what incentives are
□ Get an overview of incentives development
□ Understand the factors behind incentive travel decisions
Incentive travel is a management tool for rewarding and motivating sales
representatives, dealers, distributors, production workers, support staff, and in
some cases, customers. The company rewards sales representatives who
reach sales targets by sending them on trips. Usually, the incentive trip will
last three days, with hotel stays, tour packages and planned activities such as
dinners, parties and games. The incentive travel market is mature in the U.S.
and Europe, and is developing in Asia; especially in Singapore and Japan.
5.1. Factors Behind Incentive Travel Decisions
□ Incentive budget economy – How strong is the economy in the country
in which the sponsoring group is headquartered?
□ Buying power – Strength of the exchange rate in the countries being
considered as the destination for the trip
□ Political climate – Terrorist alert levels after the 911 incident
□ Value - How do facilities and services compare with other choices of
destination
□ Uniqueness of experience – Takes into consideration whether these
participants have experienced this type of trip before
Activity 5.1
Check out the Hong Kong Tourism Board (HKTB) website
(http://www.mehongkong.com/eng/mice/html/meeting_incentives/mi-incentiveactivities.html) to find out what activities can be included in an incentive trip to
Hong Kong.
TIP 1: Click on the Incentive – Inspired Team-Building Activities to look for
different activities and services in Hong Kong
TIP 2: Click on the Unique Theme Parties page to see some sample
activities.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
6.
SECTOR OVERVIEW – CONVENTIONS
Learning Objectives:
□ Explain what conventions are
□ Observe an example of a convention
□ Understand the difference between meetings and conventions
Similar to meetings, conventions are gatherings of people with common
objectives, organized to exchange ideas, views and information of common
interest to the group. An organization, usually an association, will organize a
convention each year with a theme related to the organization’s topic. Those
interested in registering for the convention can pay the association a fee for all
the sessions, discussions, food and beverage, dinners, and site visits.
The major differences between a meetings and conventions is that a
convention:
□ Is a large event often lasting for several days and involving a social
programme
□ Is organized by associations:
o Professional and trade associations, e.g. the Dentist Association
o Voluntary associations and societies
o Charities
o Political parties
□ Usually conducted once a year
□ Generates income for the association
□ A long time is spent on selecting the site of the convention
Photo 4 A general session of a
convention (Courtesy of WFMH &
NLPRA)
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Meetings, Incentives, Conventions and Exhibitions (MICE)
Conventions are also known as conferences or congresses. Because
conventions are usually held by an association, they can be organized into
different levels: international, national, regional, etc. See Table 1 for an
example of a programme.
Table 1 Programme for the 2007 WHMH Congress (Courtesy of WFMH & NLPRA)
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Meetings, Incentives, Conventions and Exhibitions (MICE)
Activity 6.1
Fill in the following table to compare the difference between meetings and
conventions:
Conventions
1. Can you find out the
background information
or history about the
event?
2. Who will be the contact
person?
3. How long does it take to
plan this event?
4. How often does this
event occur?
5. Who decides where to
have this event?
6. Do attendees choose to
attend this event?
7. Who is paying the fee
for the event?
8. Are there any
restrictions on site
location?
9. How many people
attend this event
usually?
10. How many of this event
will a city hold in a
year?
11. How long does this
event usually last for?
12. What kind of hotels do
the attendees tend to
stay in?
13. What kind of venues or
facilities does this event
need?
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Meetings
Meetings, Incentives, Conventions and Exhibitions (MICE)
7.
SECTOR OVERVIEW – EXHIBITIONS
Learning Objectives:
□ Explain what exhibitions are
□ Identify the purpose of exhibitions
Exhibitions are activities organized to show new products, services and
information to people who have an interest in them, such as potential
customers or buyers. The company showing their new products, the exhibitor,
typically rents an area from the organizer and sets up a booth to meet with
potential buyers. The buyers or the public need an invitation or a ticket to be
allowed into the exhibition.
Figure 2 A sample floor plan for a fair
□ Purpose:
o Get sales leads
o Build a network for influential contacts
o Gather new information on the competition
o Build the company’s image
□ Industry Associations:
o International Association for Exhibition Management (IAEM)
o Centre for Exhibition Industry Research (CEIR)
o Hong Kong, HKECIA - www.exhibitions.org.hk
Depending on the size and type, exhibitions may also be called:
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Meetings, Incentives, Conventions and Exhibitions (MICE)
□ For the public:
o Show – e.g. Aerospace Show 2008
o Fair – e.g. Comic Fair
o Exposition or expo – e.g. Food Expo, World Expo 2010 at
Shanghai
□ Open only to business buyers:
o Trade show
o Trade fair
o Trade expo
Photo 5 Exhibition booths
Activity 7.1
Recount the experience a show or fair you attended recently by answering the
following questions.
1. What was the show?
2. When was it?
3. Where was it?
4. How much was the ticket?
5. How many days did the show last for?
6. How many people did the show attract?
7. How many exhibitors were there?
8. Why were you participating?
9. Did you buy anything?
10. Will you join the same show next year?
11. Were there any activities besides booths?
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Meetings, Incentives, Conventions and Exhibitions (MICE)
8.
INDUSTRY BENEFITS
Learning Objectives:
□ Explain why meetings, incentives, conventions and exhibitions are an
important part of the tourism and hospitality industry
□ Understand what impacts MICE can bring to a destination
□ Look at the importance of MICE to Hong Kong
8.1. Value of MICE
Many cities would like to develop MICE because of the benefits MICE bring to
a city.
□ Higher expenditures – A business traveller usually spends on more
than the average tourist, as they stay in better hotels and dine at fine
restaurants since they are meeting with business clients.
□ Demand period occurs on low seasons – Many destinations have
different travel seasons. Because the business traveller travels to a
destination with the main purpose of attending a MICE event, the MICE
event does not have to be scheduled during the peak season when
most tourists tend to travel. The business traveller can help the city by
taking up some of the empty hotel rooms available during off seasons.
□ Stable arrangement well in advance – Usually the planning of a MICE
event takes one to two years in advance, and even three to five years
for international events due to the number of participants at the event.
The event planners also need to book well before the event in order to
select their preferred rooms and venues. Repeat events also require a
stable method of booking. If the book fair goes well this year, the
planner will book similar halls and rooms the year after.
□ Large scale – Most MICE events may have a large number of
attendees. An international convention usually requires 500 hotel
rooms per night and big conference rooms in the day. An exhibition,
either local or international, expects to have over thousands of
attendees and requires several large exhibition halls.
□ Standardized services – All attendees for the same MICE event will
have very similar requirements as to service standards while similar
MICE events would usually have similar programmes and thus
standardized services are required
□ Enhance secondary businesses – Many suppliers are needed for MICE
events. Booth set-up companies and decoration experts are necessary
for the exhibition. Entertainment agencies are needed for incentive
travel parties.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
□ Improve host city image – The city which holds the international MICE
event can give travellers a professional image
□ Indifference to lack of tourism attractions – Business travellers travel
primarily for the purpose of attending a MICE event, not for the
attractions of a destination. Even if a city does not have unique
attractions, it can still be chosen to hold an event due to other reasons,
such as ease of access
□ With no particular fixed destination, there is a free field for competition
– Many MICE events are not fixed on a host city or country. As long as
a city has adequate MICE venues and facilities, it is possible for the
city to be selected to hold the event
□ Using facilities for other purposes – Other than traditional venues such
as exhibition centres or conference halls, MICE events can make use
of existing facilities that may originally have other purposes, e.g.
universities.
Importance of MICE to Hong Kong
□ From 1999 to 2002, the number of convention and exhibition
attendees jumped by 211%
□ Business/Meetings as the major purpose of visit - 25% in 2004
□ Number of Overseas visitors
o Conventions & Exhibitions ٛ 779,000
o Corporate Meetings & Incentives ٛ 829,000
□ Number of Events in 2006
o Conventions - 218
o Exhibitions - 78
□ Intended Per Capita Spending - HK$10,349
□ Average Length of Stay - 4.7 days
Economic Impact
1. Expenditure: HK$26.4 billion to Hong Kong’s economy in
2006
□ Direct expenditure (expenditure specifically by exhibition
organizers, exhibitors and visitors)
o HK$13.2 billion
ƒ 62% from visitor spending
ƒ 38% from spending by event organizers & exhibitors
□ International visitors were responsible for HK$8.2 billion
□ Most visitor spent cash on food, accommodation and shopping
(HK$7 billion).
□ Indirect expenditures (when exhibition suppliers purchase goods
and services from elsewhere)
o HK$7.9 billion
□ Induced expenditures (spending in the local economy by those
employed in and supplying the industry)
o HK$5.3 billion
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Meetings, Incentives, Conventions and Exhibitions (MICE)
2. Fiscal impact: HK$970 million Tax
□
□
□
□
□
□
This tax estimate is based on HK$26.4 billion
Profits tax of HK$510 million
Salaries tax of HK$280 million
Hotel tax of HK$130 million
Airport tax of HK$50 million
The industry accounts for 1.8% of Hong Kong’s GDP
3. Employment: Equivalent to 58,500 full-time jobs across
related industries
□ Only 2,100 full-time jobs were directly provided by event organizers
and venue providers
□ 56,400 full-time jobs in support sectors
□ Services provided to events and visitors, included retail, transport,
food and beverage, hotel, exhibition stand design and construction,
freight forwarding, and advertising
□ The sectors benefiting most were food and beverage, hotel and
retail (76% of the jobs).
□ 24% were spread across other sectors: Stand construction,
advertising and logistics / freight services
(Source: HKECIA 2007)
Figure 3 Quick Facts
Activity 8.1
Visit the Hong Kong Tourism Board PartnerNet
(http://partnernet.hktb.com/pnweb/jsp/comm/index.jsp?charset=en&pageCont
ent=//jsp/doc/docMain.jsp&cat_id=5264&menu_cat_id=2) to find information
on the average spending and length of stay of leisure tourists to Hong Kong,
compare the statistics with the Quick Facts above to discuss the value of
MICE to Hong Kong.
Activity 8.2
Brainstorm the possible benefits that MICE can bring to Hong Kong. Then
draw a mind map to link them together. The mind map may start with the
arrival of the tourist. Add to it and keep expanding to further levels. You may
end up with a map with many levels, allowing you to see the complex effects
and interrelationships.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
9.
INDUSTRY SECTORS INVOLVED – HOTEL
Learning Objectives:
□ Describe how the different sectors of the tourism industry are involved
in hosting MICE
□ Identify the roles of different types of hotels
□ Look at the contribution of MICE to hotels
Where attendees spend money?
Retail StoresLocal
Transportation
Entertainment
Other Restaurants
Hotel Restaurants
Hospitality Suites
Other Items
Hotel Rooms
Figure 4 Where attendees spend money?
Hotels are the main suppliers of MICE and are the main beneficiaries as well.
Business travellers who attend MICE events spend over 65% of their money
on hotels for rooms and hotel dining while 15% is spent on other restaurants
outside the hotel. Around 10% is spent on shopping and another 10% on
local transportation.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
9.1. Roles of Hotels
One of the most common sites for a MICE event is a hotel. Hotels can
provide facilities, space and function rooms for MICE activities;
accommodations, the housing of the business travellers who attend the
MICE event; and food and beverage services at the event, as well as meals
for travellers who stay in the hotel. Typical hotels have accommodation rooms,
restaurants, ballrooms, meeting rooms, swimming pools, a business centre
and more. In relation to MICE activities, a hotel plays different roles
depending on its facilities and the size of the MICE event:
1. Accommodation and meals
□ When all the activities of the convention are held elsewhere
2. Accommodation, meals, seminar rooms for supplementary sessions
□ When the major convention is held elsewhere
3. Facilities for associated receptions, banquets and support events
□ When some of the convention activities are held elsewhere and
delegates stay in other hotels
4. Inclusive residential conferences and meetings
□ All the activities related to the convention are held and delegates stay
at the same hotel
Photo 6 Accommodation (SHTM Hotel
of PolyU)
Photo 7 Food and Beverage (SHTM
Hotel of PolyU)
9.1.1. Facilities
The facilities in a hotel vary in size and set-up, ranging from a small meeting
room for 10 people to a large theatre for thousands. Different types of facilities
can be suitable for the different functions of a MICE event.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
Photo 8 A theatre (SHTM Hotel of PolyU)
Photo 9 A Ballroom (SHTM Hotel of PolyU)
Activity 9.1
Match the activities on the left with the suitable facilities on the right.
Activity
Meeting
●
Incentive
●
Convention
●
Exhibition
●
Facility of a hotel
●
meeting room
●
ballroom
●
exhibition hall
●
conference room
●
theatre
●
accommodation
●
reception area
Can a hotel provide all of the above facilities?
9.1.2. Accommodation
When providing housing for business travellers to stay during the MICE event,
the hotel will have the following services for the delegates, the business
travellers who attend the MICE event; and entourage, persons who travel
with the delegates, usually the spouse, children, personal assistants,
secretaries etc.
1. When delegates and their entourages stay in the same hotel where the
convention activities are held:
□ Large hotels can take advantage by housing all related activities (in the
case of a convention), including all accommodation and food and
beverage services
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Meetings, Incentives, Conventions and Exhibitions (MICE)
2. When delegates and their entourages stay in other hotels where the
convention activities are held, the hotel which holds the main activity should:
□ Provide a range of choices
□ Keep in close contact with other hotels and the main convention venue
3. When delegates and their entourages stay in the hotel while all the
convention-related activities are held in other venues such as a convention
and exhibition centre:
□ The hotel and main event venue must keep in close contact
9.1.3. Types of Hotel
Certainly, different types of hotel are suitable for different types of MICE
activities. In general, hotels can be grouped into five types, based on the hotel
facilities:
Types of
hotel
Large city
business
hotels (250600 rooms)
Medium-sized
suburban/
motor hotels
(150-250
rooms)
Location
□
□
□
□
□
□
Large resort
hotels and
integrated
resorts (3001,200 rooms)
□
□
Airport hotel
(250-400
rooms)
□
Country
hotels,
Boutique
resorts (80120 rooms)
Distinctive features
Central location
Commercial
business districts
nearby
Good access with
public transport
Parking
Near major junctions
Access to highway
routes and downtown
□
Nearby attractions
Spacious
□
□
□
□
□
□
□
□
□
□
□
□
□
□
Linked to or near an
airport terminal
Easy access to city
and regional
transport and
highways
Signposted
□
□
Remote locations
Spacious grounds
□
□
□
□
□
□
□
□
26
Example
High standard of business
services
Large ballroom
Spacious lobby
Room service
Leisure/fitness centre
The Grand
Hyatt Hong
Kong
Meeting rooms for 25-100
max
Work stations in guest rooms
Easy access and parking
Small gym
The Royal
Park Hotel
Large ballroom(s)
Extensive meeting and
function rooms
Pools and recreation facilities
Golf course
The Gold
Coast Resort
May have purpose-built
theatre
Usually provides a range of
medium-sized and small
function rooms
Health and fitness suite
Extensive glazing and
soundproofing
Small meeting rooms and
suites
High-quality service
Health and fitness suite
Golf course
The Regal
Airport Hotel
Lan Kwai
Fong Hotel
Meetings, Incentives, Conventions and Exhibitions (MICE)
Table 2 Types of hotels
Quick Fact: Hong Kong had 134 hotels with 51,500 rooms in 2006
9.1.4. Large Properties vs. Small Properties
Hotels of different sizes are suitable for different types of MICE activities.
□ Large properties
o can cater to a wider range of MICE activities, from small
corporate meetings of 30 to international association
conventions of 1,000
o tend to host international MICE activities
□ Smaller properties
o can take advantage of nearby convention and exhibition centres
by hosting all food and beverage functions such as banquets
and housing supplementary sessions such as small talks
o tend to hold local MICE activities such as local corporate
meetings and small local shows
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Meetings, Incentives, Conventions and Exhibitions (MICE)
Activity 9.2:
Complete the table below to specify which type of hotel is suitable for what
kind of MICE events.
Types of hotel
Large city business hotels
Suitable for this MICE activity because:
M
I
C
E
Medium-sized suburban/
motor hotels
M
I
C
E
Large resort hotels and
integrated resorts
M
I
C
E
Airport hotel
M
I
C
E
Country hotels, Boutique
resorts
M
I
C
E
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Meetings, Incentives, Conventions and Exhibitions (MICE)
9.2. Food and Beverage
Other than supplying meals such as
breakfasts, lunches, afternoon teas and
dinner banquets for different sessions
included in a MICE event programme, a
hotel can also provide delegates and
entourages with food and beverages
through its restaurants, cafes and coffee
shops, as well as through room service.
Photo 10 Lunch in buffet style
9.3. Hotel Contribution
MICE activities contribute the following to the hotel sector:
□ MICE accounts for up to 65% of total sales in major hotels
□ MICE attendees tend to use other hotels services, such as restaurants
□ Spouses and entourages bring in additional business
□ MICE events allow a hotel to forecast advance bookings and can help
fill gaps during low seasons
□ MICE customers have an excellent chance of becoming repeat guests
The cost of the hotel will in turn affect the attendance of a MICE event.
Particularly for incentive trips, many activities take place in a hotel or
resort and the company is responsible for the cost of a few nights’
accommodation. For international conventions and exhibitions, the cost
of staying a few nights is part of the total travel cost.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
10.
INDUSTRY SECTOR INVOLVED – TRANSPORTATION
Learning Objectives:
□ Describe transportation management in relation to MICE
□ Outline the roles of different types of transportation
Transportation management covers routing, vehicle use, staff requirements,
maps, signage and preparation. The cost of transportation will also have an
impact on the number of attendees. For incentive trips, transportation
management is crucial, as most trips will involve large group travel. Group air
tickets and ground coach bus tickets are also frequently used.
10.1. International
Major international transportation methods include flights, cruise ships and
trains.
For MICE events that involve international attendees, transportation plays a
major role in determining the success of an event. Cities located near major
air or land transport hubs have the advantage of being able to draw in more
attendees. While travellers can fly directly from New York to Hong Kong on a
direct flight using Cathay Pacific, they will need to tack on a ferry trip to reach
Macau. In such cases, Hong Kong is more convenient due to its sophisticated
and well-developed transportation network.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
Quick Fact:
Hong Kong is
* Easily accessible worldwide with almost 1,900 flights a week
connecting with the rest of the world.
* Allows visa-free entry from citizens of over 170 nations
* The gateway to Asia and China
10.2. Local
Once the travellers arrive at the airport, they can be connected via the local
transport system. This includes transportation:
□ from the airport to the hotel
□ from the hotel to MICE event venues
□ from venues to various site visit spots
□ from the hotel to the different
attractions
□ from the hotel to the client’s
office
□ from the hotel to the central
business district
□ from the hotel to the airport
Cities offering different vehicles of
Photo 11 Travelling in a coach bus
public transportation enhance the
travel experience and increase traveller expense. Local public transports
include:
□ Water – cruise ships, ferries
□ Land – limousines, taxis, buses, shuttle buses, trains, trams, cable cars
Map 1 is a local transportation map that shows you the different ways to reach
the airport from any location in Hong Kong.
Activity 10.1
List the ways in which you can travel to the airport from the Hong Kong
Convention and Exhibition Centre in Wanchai. Map 1 will give you ideas.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
Map 1 Public transport to HK international airport
(Source:
http://www.td.gov.hk/transport_in_hong_kong/access_to_hong_kong_international_airport/index.htm)
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Meetings, Incentives, Conventions and Exhibitions (MICE)
11.
INDUSTRY SECTOR INVOLVED – ATTRACTIONS AND
SUPPORTING INFRASTRUCTURE
Learning Objectives:
□ Illustrate how attractions can be linked to MICE events
□ Obtain an overview of the various attractions in Hong Kong
□ Explain the importance of supporting infrastructure to planners and
attendees
11.1. Attractions
Although the main purpose for business travellers is to attend a MICE event,
they would usually prefer to visit some of the local attractions. Most of the time,
a post-conference tour is organized after the convention for international
attendees to visit the attractions in and near the host city. For incentive travels,
visiting local attractions might even be the objective of the trip. The MICE
attendees are also good potential future visitors to these attractions.
Therefore, when deciding whether or not to attend the MICE event, business
travellers may also keep local attractions in mind.
An official travel agent will usually be contracted to organize the post-event
tour. This travel agent also takes care of the travel arrangements of the
attendees, if necessary, by providing a local guide.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
3322
3300
3355
3366
3311
3377
2299
2288
2266
3333
1144
1166 1177
1155 1188
2222
2200 2211
1199
3344
4422
4411
3399
4400
11
4433
3388
2277
2233
2244
2255
33
77
22445566 88
4444
1111 1122
1100
99
1133
Map 2 Attractions in Hong Kong
(Source: http://www.gohk.gov.hk/eng/welcome/index.html)
Activity 11.1:
Based on the map of attractions above, plan a one-day post-conference tour
for the attendees to experience Hong Kong. You can:
1. Draw the route on the map by linking different attractions
2. List out the number that represents the different attractions
3. Plan out the time required for each point of interest
11.2. Supporting Infrastructures
Advances in technology have made trade show and exhibition management
easier and more productive. Providing infrastructure for information and
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Meetings, Incentives, Conventions and Exhibitions (MICE)
communication technologies (ICTs) depends on the development and
planning of the city.
11.3. Technology Infrastructure
Bandwidth is the amount of information that can pass through a
communications line. As it relates to the Web, bandwidth typically comes in
two options: dial-up and broadband. Dial-up is insufficient for handling on-line
needs at MICE events. High-speed broadband is therefore required to meet
the on-site needs of:
□ registration networking – to support the on-line registration system
□ attendee e-mail kiosks – a centre for attendees to access their e-mail
□ attendee messaging centre
□ office and press room communications centres
□ speaker Internet access for presentations
□ live Web conferencing for sessions – streaming audio and video via the
Web
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Meetings, Incentives, Conventions and Exhibitions (MICE)
15.
MICE PLANNING
Learning Objectives:
□ Understand the planning process components
□ Introduce the aims and objectives of a MICE event
□ Explore the basic tasks involved in planning
The planning process component:
1. What to achieve?
Mission and objectives
2. What works?
Feasibility study
3. Who to ask?
Stakeholders/organizational
structure
4. Deciding factors?
External/internal analysis
5. Risk/challenges?
Opportunities and threats
6. Moving forward?
Select strategy and operational
plan
7. Who is in charge?
Roles and responsibilities
8. Doing the right thing?
Control system
9. How to do it better next time
Evaluation and feedback
The planning starts with setting objectives. Objectives must be SMART:
□ Specific – focused on goal and purposes
□ Measurable – expressed in a way that is quantifiable
□ Agreeable – agreed to by all stakeholders
□ Realistic – the needed resources must be available to achieve them
(human, financial and other…)
□ Time specific – can be completed within a particular time frame
15.1. ORGANIZATIONS GOALS
Different types of organization have different goals when producing events.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
PRIVATE, FOR PROFIT
•
•
•
Companies producing events on
their own or under contract
Corporations creating events for
marketing reasons
Hotels, resorts, facilities using
events as attractions and image
makers
GOVERNMENT AGENCIES OR
PUBLIC-PRIVATE GROUPS
•
•
•
Leisure and social agencies, to foster
sport, arts, or community integration
Arts / cultural groups to foster
appreciation and participation
Economic development and tourism,
to create jobs and income
NOT-FOR-PROFIT
•
•
Charities and causes, to
attract revenue and support
Community-based societies
and informal groups, for
multiple community benefits
Figure 8 Organizational goals for producing events
15.2. Organization Structure
Planning a MICE event or any event involves different teams working on
different functions. Depending on the type of organization, these teams can
be entire departments or committees. Regardless of organizational
background, each team must perform its specific function.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
FINANCE
•Fund raising
•Sponsorships
•Budget
•Controls
PLANNING
•Strategy
•Research
•Policies
•Evaluation
BOARD OF DIRECTORS
MARKETING
•Market plan
•Research
•Theming
•Ticketing
ADMINISTRATION
•Secretarial
•Reports
•Supplies
OPERATIONS
•Venues
•Equipment
•Security
•Parking
•Hospitality
CONCESSIONS
•Food and beverages
•Merchandise
PERSONNEL
•Volunteers
•Employees
•Committee
assignments
•Records
PROGRAMME
•Entertainment
•Activities
•Awards/prizes
Figure 9 Organizational structure – Functional-Based (Not for Profit)
Sometimes, the organizational structure can be monitored by a governing
committee; especially when the event is organized by a membership
association.
BOARD OF DIRECTORS
SPONSORSHIP
MARKETING
BOARD COMMITTEES
Personnel
Finance
Policy
Nominating
Constitution
•
•
•
•
•
VOLUNTEERS
VENUES
TALENT
RESEARCH
Figure 10 Functional-based Organization Structure with Governing Committee
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Meetings, Incentives, Conventions and Exhibitions (MICE)
However, it may not be easy for a corporation to identify the structure of an
event planning group. This is because the planner can be the secretary,
personal assistant or an executive whose main duties do not involve event
organization. If the corporation does not have a dedicated team of
individuals to organize events, the structure will be similar to an ad hoc
and functional-based one as displayed in Figure 9.
15.3. How to Start a Project
□ Confirm members of the organizing committee
□ Confirm date and venue (submit requests for proposals (RFP))
□ Decide on conference theme and logo
□ Appoint Professional Congress Organizer (PCO) or event planner
□ Invite and confirm members of the various subcommittees
□ Set up a work plan – e.g. Critical Path Method (CPM) or Flow Chart
□ Set up a budget (confirm registration fees)
□ Set up a bank account
□ Set up a conference website and e-mail account
□ Produce conference stationeries -- letterhead and envelopes
RFP is a Request for Proposal. The event planner needs to send out a
RFP to ask hotels, restaurants, convention and exhibition centres, and
other venues to draft a proposal based on the organization’s
requirements. By comparing different RFPs, the planner and
organization representatives can then decide on their choice of
suppliers. Therefore, the key of the RFP is to clearly state to suppliers
the event planner’s expectations.
Case study: The 2007 World Federation Mental Health Congress – Theme
and Logo
The World Federation of Mental Health’s (WFMH) 2007 World Congress was
held in Hong Kong. When the organizers started to plan the congress, they
focused on a theme related to the location, Hong Kong. Since Hong Kong is
a metropolitan city where “East meets West,” this cultural concept set the
theme for the whole congress. The logo and the congress track were also
derived from this theme. See the following explanation of the congress logo
and the different tracks of the congress.
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Meetings, Incentives, Conventions and Exhibitions (MICE)
The Congress Logo “Tai” originates and synthesis the two fundamental
Chinese concepts, namely “Yin-Yang” and “Tai”. To the Chinese,
“Yin-Yang”, the circular symbol, means the dynamic balance and
interdependence between the two forces within the individual,
between the individual and the universe as well as between the east
and west cultures; while “Tai”, the state of wellbeing, denotes the law
of nature where heaven and earth forces meet in harmony, calmness,
peacefulness and prosperity from within.
Congress Theme
Impact of Culture on Mental Health: East meets West
Congress Tracks
•
•
•
•
•
Importance of environment on mental health
Cultural issues on mental health
Advancement in care and treatment
Trends in promotion and prevention
Consumers and Family Caregivers
Figure 11 Logo of WFMH 2007 World Congress (Courtesy of WFMH and NLPRA)
15.4. Preparation Stage
A typical MICE event will have the following subcommittees to perform
different functions:
1. Program subcommittee
2. Social subcommittee
3. Registration and hotel and tour bookings
4. Publicity subcommittee
5. Sponsorship subcommittee
6. Printing and production
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Meetings, Incentives, Conventions and Exhibitions (MICE)
Program subcommittee
15.4.1.
□ An Example of a Setup Programme Structure:
• Opening ceremony
• Keynote presentation
• Plenary session
• Committee programs
• Breakout sessions
• Closing ceremony, if any
□ Nominate guest of honour and speakers / call for paper
□ Follow-up speakers with bios, photos and/or abstracts
□ Fix the program rundown
□ Protocol
□ Security
□ Invitation to VIPs
□ Confirm venue setup, decoration and A/V requirements (on stage/off
stage)
Usually, it takes around 12 months or more to plan for a MICE event. (For
large international events, the planning time can be up to 24 months or even
up to 36 months.)
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Meetings, Incentives, Conventions and Exhibitions (MICE)
Activity 15.1:
Plan the above tasks. Think about which task should be done first and the
best time to complete the tasks that are not as important.
12 Months
11 Months
10 Months
9 Months
8 Months
7 Months
6 Months
5 Months
4 Months
3 Months
2 Months
1 Month
15.4.2.
Social Subcommittee
□ Set up the type/nature/quantity of social programs
□ Confirm date/time/venue
□ Decide on the program rundown
□ Guest of honour
o protocol
o entertainment
o transportation
o security
□ Confirm venue set-up, decoration and A/V requirements (on stage/off
stage)
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Meetings, Incentives, Conventions and Exhibitions (MICE)
□ Confirm food and beverage plan
□ Menu (Chinese or Western)
□ Drink package (wine, beer, juice, soft drinks)
o Special meal requirements (no beef/pork, vegetarian etc.)
Activity 15.2:
Plan the above tasks. Think about which tasks should be completed first and
the best time to complete the tasks that are not as important.
12 Months
11 Months
10 Months
9 Months
8 Months
7 Months
6 Months
5 Months
4 Months
3 Months
2 Months
1 Month
Registration and Hotel & Tour Booking
15.4.3.
□ Prepare registration forms (on-line/hard copy)
□ Set up registration database
□ Identify and reserve hotels
□ Set up optional tour program for:
•
Accompanying persons during the conference
•
Pre/post-congress tour
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Meetings, Incentives, Conventions and Exhibitions (MICE)
□ Send confirmations to delegates as registrations arrive
Activity 15.3:
Plan the above tasks. Think about which tasks should be completed first and
the best time to complete the tasks that are not as important.
12 Months
11 Months
10 Months
9 Months
8 Months
7 Months
6 Months
5 Months
4 Months
3 Months
2 Months
1 Month
15.4.4.
Publicity Subcommittee
□ Individual connections and past conference delegates
•
Direct mail - send registration brochures by mail
•
Group e-mails - organize regular e-newsletters
□ Professional associations
•
Regular publications
•
Event calendars
•
Group e-mails
□ Event Marketing
•
Attend similar events to promote own event
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Meetings, Incentives, Conventions and Exhibitions (MICE)
□ Media
•
Ad/Inserts in publications
•
Press releases
□ Sales Promotions
•
Complimentary/discounted registrations
Activity 15.4:
Plan the above tasks. Think about which tasks should be completed first and
the best time to complete the tasks that are not as important.
12 Months
11 Months
10 Months
9 Months
8 Months
7 Months
6 Months
5 Months
4 Months
3 Months
2 Months
1 Month
15.4.5.
Sponsorship Subcommittee
□ Prepare a sponsorship and exhibition prospectus
□ Appoint official contractors for exhibition floor plan and booth set-up
□ Identify and recruit potential sponsors and exhibitors
□ Send technical and instruction manuals to confirmed exhibitors
□ Monitor all terms and conditions stated in the sponsorship contract
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Meetings, Incentives, Conventions and Exhibitions (MICE)
Activity 15.5:
Plan the above tasks. Think about which tasks should be completed first and
the best time to complete the tasks that are not as important.
12 Months
11 Months
10 Months
9 Months
8 Months
7 Months
6 Months
5 Months
4 Months
3 Months
2 Months
1 Month
15.4.6.
Printing and Production
□ Registration brochures
□ Invitation cards
□ Conference proceedings – a book or CD
that contains all written articles for
presentation
□ Conference program
□ Delegates' list
□ Badge
□ Name plates
□ Conference satchels
Photo 14 Proceedings:
books and CD
□ Pens and pads
□ Souvenirs - guests of honour, speakers, delegates
□ Tickets
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Meetings, Incentives, Conventions and Exhibitions (MICE)
Photo 15 Pen, Pad & Souvenir
Photo 16 Name Badge & tickets
Activity 15.6:
Plan the above tasks. Think about which tasks should be completed first and
the best time to complete the tasks that are not as important.
12 Months
11 Months
10 Months
9 Months
8 Months
7 Months
6 Months
5 Months
4 Months
3 Months
2 Months
1 Month
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Meetings, Incentives, Conventions and Exhibitions (MICE)
15.5. On-site preparation
□ Set up an on-site work and manpower plan
□ Prepare the venue operation order and food and beverage plan
□ Buy insurance
□ Arrange photographer/videographer
□ Arrange transportation for on-site equipment
□ On-site staff briefing
Timeline: Six to eight weeks before conference start
15.6. Wrap Up
□ Send relevant thank you letters with photos
□ Settle all payments
□ Prepare an income and expenditure report
□ Prepare a final report with statistics and recommendations
□ Finalize all matters
Timeline: Within two months after conference end
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Theme Parks and Attractions
1.4
Amusement and theme parks
Definitions
An amusement park provides a place for relaxation and temporary escape. It is an
outdoor centre providing various rides, games and entertainment, live performances,
food and beverage, and retailing. Sometimes, an amusement park is built together with
a shopping mall to enhance its attractiveness.
Similar to an amusement park, a theme park contains a variety of entertainment, food
and beverage, and shops and an environment that is designed around a key theme.
According to the International Association of Amusement Parks and Attractions
(IAAPA), a theme park is ‘an amusement park that has themed attractions, be it food,
costumes, entertainment, retail stores and/or rides’. The theme is the main part of the
visitors’ experience which is chosen when the park is planned to provide a focus for the
design, development and operation of such a park. Therefore the selection of the theme
is extremely important to the operations of the park.
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Theme Parks and Attractions
Types of theme park
The type of theme park is one of the factors affecting visitors’ preference. Theme parks
can generally be classified into seven theme types and related attributes as follows:
Table 7 – Types of theme park
Type of theme park
1. Adventure
Attributes
• Excitement and action
• Frightening
• Mysterious
• Thrill rides
2. Futurism
• Advances in society and technology
• Discovery
• Exploration of science and
technology
• Robotics
• Scientific
• Science fiction
3. International
• Flavours of the world
• International village
• Miniature replicas
• Scenic spots
• World expositions
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Theme Parks and Attractions
Type of theme park
4. Nature
Attributes
• Animals
• Floral displays
• Horticultural gardens
• Landscaping
• Marine life
• Natural wonders
• Ocean
• Wildlife
5. Fantasy
• Animation
• Cartoon characters
• Childhood enchantment
• Children’s play park
• Fairy tales
• Magic
• Make believe
• Myths and legends
6. History and culture
• Aboriginal
• Authentic
• Cultural heritage
• Cultural village
• Gold rush
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Theme Parks and Attractions
Type of theme park
Attributes
• Historic ambience
7. Movies
• American Wild West shows
• Comedy
• Motion pictures
• Show business
• Stunt shows
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Theme Parks and Attractions
1.5
The visitor attraction product
In the attractions sector, the product is a combination of facilities and services. It is a
bundle of benefits designed to satisfy visitors’ needs. The attraction products are
composed of both tangible and intangible elements. They can be as simple as a kid’s
ride or as abstract as an experience.
If we apply the attraction product concept to a theme park, the ‘product’ we purchase
and consume includes:
Tangibles
•
•
•
•
•
•
•
Rides
Costumed characters
Shops
Restaurants
Themed decorations
Clean and pleasant environment
Appearance of the staff
Intangibles
•
•
•
•
Feeling or atmosphere of fun and excitement
Pleasant and comfortable atmosphere
Staff attitude and behaviour
Service provided
The nature of service products (eg a packaged holiday offered by a tour operator) is
different from tangible products (eg a camera bought from a shop). You may see, touch
and test a camera before buying it in a shop and bring it back home after you have
purchased it. You may also make a purchase online and have the goods delivered.
However, this is not the same for service products which also have abstract elements or
characteristics.
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Theme Parks and Attractions
Intangibility
When we visit an attraction, there is no tangible product to carry home. We can take
photos and enjoy the feeling of the place. However, what we ‘bring home’ are the
experience and memories of the visit which are individual and abstract in nature.
Inseparability
Both the staff and the visitors themselves are involved in the production of the service.
Also the service is produced and consumed at the same moment. When museum staff
introduce a visitor to exhibits and their cultural values, the visitor interacts with the
staff member. The visitor’s expectations, attitudes and experience will affect their
interaction with the staff.
Hence, you and your friend’s visit to the theme park may result in different experiences
and memories about the same visit. While you may feel satisfied and happy with the
thrills experienced, your friend may not agree because they do not like the hot weather
and rides because the latter were too frightening for them or made them feel dizzy or
sick.
Perishability
The attraction service products provided can neither be stored, nor standardised. As
visitors are involved in the production of services, the intangible experience varies
from visitor to visitor. In addition, as staff provide different services, the service
product can never be controlled and standardised before it is delivered.
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Theme Parks and Attractions
1.10 The visitor attraction market III – Important
features
Most important features
Visitors going to an attraction are expecting an enjoyable experience with their friends
and relatives. What they are looking for includes not only the activities but also other
attributes of the attraction. There are several important features that were found to be
important for theme park visitors. In 1997 and 2008 Ap conducted surveys of guests at
a theme park and found that the most important features of the park, in order of priority,
were:
(1)
(2)
(3)
(4)
(5)
Cleanliness of the park
Nice scenery/surroundings
Control of lines/queues
Fun atmosphere
Shows
Factors influencing decisions to visit a theme park
Although people may be aware of and attracted to a theme park, they may not visit for
several reasons. Some factors are very important, and include:
•
•
•
•
•
•
•
Weather
Preference for the type of park
Children’s desire to visit the park
Cost
Perceived crowdedness of the site
Distance
Availability, type and cost of on-site accommodation
Marketers need to understand how these factors affect the visitors’ decision to visit a
park and address them in the management and operations of the park
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Theme Parks and Attractions
4.1
Influencing factors I
Not all visitor attractions succeed when they are built. There are many attractions
which are planned and built each year, but not all of them are sustainable and will
survive. Many new ideas are not even realised due to reasons such as the lack of
funding, lack of or no suitable site, and unfavourable market situation due to economic
downturn or crisis.
Some attractions may start, but close in the first few years due to declining business,
lack of investment, visitor management problems, poor management or an inability to
respond to market changes. To ensure the long-term viability of a visitor attraction,
attention needs to be paid to some important factors. These factors may be grouped
into four areas:
1.
2.
3.
4.
The organisation and its resources
The product
The market
The management of the attraction
The organisation and its resources
•
Experienced management – Organisations that are experienced in developing and
operating visitor attractions may learn from past experience and hence have a
higher chance of successfully managing new visitor attractions. They will be more
aware of the issues, challenges and opportunities in the development of the
attraction product.
•
Strong human resources management team – Having a strong HR team is also
essential to the successful operation of a visitor attraction. They must possess the
skills and knowledge to develop and retain the staff including identifying,
recruiting, training and managing a suitable pool of qualified and skilled employees.
Maintaining staff morale is also a key responsibility for the human resources team.
The team needs to identify and use appropriate policies, guidelines and incentives
to provide employees with a safe and happy working environment.
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Theme Parks and Attractions
•
Strong financial resources and on-going investment – Unlike other small and
medium-size enterprises, building up as well as running a visitor attraction involves
huge capital investment and on-going funding. Strong financial resources are
required to periodically invest in the provision of new attractions as well upgrade
or replace the rides, facilities and services. Otherwise the business will gradually
decline with falling attendance due to the lack of repeat visits and with visitors
thinking there is nothing new.
The product
1.
Easily recognizable and interesting theme – All successful attractions have easily
recognisable and interesting themes. Disneyland and Disney World use a cast of
cartoon characters such as Mickey and Minnie Mouse, Winnie the Pooh, and Buzz
Lightyear (see www.hongkongdisneyland.com). Universal Studios uses a variety of
popular movies for many of their major attractions (eg Shrek 4-D, Terminator 2:
3-D, and Amazing Adventures of Spiderman (see www.universalorlando.com).
These unique features attract and engage the attention of more than one market
segment which make these theme park attractions stand out from their competitors.
Guests will not go to or pay extra money for attractions with a similar theme unless
there is something special and unique about it.
2.
Careful and detailed planning – Development of an attraction must go through
careful and detailed planning, which includes: site selection, feasibility studies
(market and financial), park design, environmental impact assessment and traffic
studies. The planning and design stages of the development of a new attraction or
park should be undertaken properly in the early planning and development stages
of the project. It is very difficult to correct any oversights or mistakes once the
attraction is being constructed or has been built. For example, the paths / roads
must be wide enough to accommodate large crowds and the parade, the size of the
bus and car parks must be appropriate to accommodate the majority of vehicles,
and sufficient food and beverage outlets and restrooms need to be provided. It is
crucial to make sure that all aspects of the attraction are properly considered and
planned.
3.
Variety – To accommodate different types of visitors with different tastes, there
should be a variety of on-site attractions. Weather conditions should also be taken
into consideration. For example, there is more sheltered space in Hong Kong
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Theme Parks and Attractions
Disneyland than at the other Disney Magic Kingdom Parks because of its location
in a sub-tropical climatic zone with high rainfall. Special events are also a useful
tool to add variety as visitors will be more likely to come back if they can expect
something new on their next visit.
4.
Clean and pleasant environment – A clean and pleasant environment is crucial
for visitors who, nowadays, are more demanding. Authentic decorations and design
means higher quality to the customers. It is expected that the facilities and services
will be provided in a clean and pleasant setting. Visitors would not visit a park if it
was old or tired looking, untidy and generally unpleasant.
5.
Good location – A good location is vital to the survival and accessibility of
attractions. An attraction located in a popular tourist destination with high
accessibility can capitalise on the destination’s inbound tourist market. Preferably,
an attraction should be located in an area with a large catchment area and high
population base as this is likely to increase the number of potential day trippers.
6.
Motivated and well-trained staff – Having a motivated workforce is essential to
ensure high standards of customer service. Staff should be well-trained to provide
efficient and reliable services from the heart. No matter how good the physical
facilities and elements are, people do not like to visit an attraction if they receive
rude and unfriendly service.
7.
Consistency and quality – To ensure that every guest is delighted and satisfied
with their visit, a themed attraction must offer consistent and quality facilities and
services throughout the whole attraction or theme park. All the elements, including
movement of people and goods, are carefully studied and planned in advance.
Back-up or contingency plans and arrangements are prepared to accommodate any
non-routine or unexpected incidents which may affect the normal operations of the
attraction.
8.
Value for money – Customers seek value for money when they visit an attraction.
Therefore pricing is important. Visitors usually determine whether an attraction
offers value for money by:
♦
♦
How long they spent on site
The quality of environment, services and facilities provided
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Theme Parks and Attractions
♦
9.
The variety of on-site attractions provided
A flexible and simple pricing system – Adopting a flexible but simple pricing
strategy and having a number of distribution channels (ie places and/or methods for
the sale of tickets etc. such as travel agents, 7-Eleven stores, internet etc.) that sell
tickets on behalf of the attraction allows easy purchase of entry tickets for visitors.
Theme parks often provide several types of tickets for guests to suit their plans and
budgets. For example, a one or two-day pass, an annual pass, and a combination
pass to visit more than one park or attraction.
10. Meticulous attention to detail – Meticulous attention to detail, especially in the
area of maintenance, is extremely important to ensure safety and a high quality
experience. At any amusement or theme park, rides and roller coasters etc. are all
checked daily. Attraction facilities and parade floats need to be well maintained and
re-painted regularly to keep them fresh and new looking. Hong Kong Disneyland,
for example, has a team of approximately 100 engineers and maintenance people
who work in the park after all the guests depart to undertake regular safety and
maintenance checks. In addition, at all Disney Parks, the paths and roadways are
steam-cleaned or washed down every night.
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Theme Parks and Attractions
4.2
Influencing factors II
The market
Today, customers are becoming more and more demanding. Their preferences and
tastes also change easily. A successful attraction should therefore be pro-active in the
market and, more importantly, focus on identifying new and emerging markets.
Management needs to research, well in advance, what types of activities and
experiences their guests are currently interested in and plan appropriate products to
satisfy guest needs accordingly.
Some examples are as follows:
a.) Seniors market – More and more attractions are aimed at senior travellers
who generally have higher disposable income and leisure time. This group of
visitors usually requires more activities but with lower energy levels.
b.) Environmentally friendly – People are now more aware of the need to
preserve and conserve the environment and our cultural heritage. Attractions
that focus on nature and culture are becoming more popular.
c.) ‘Edutainment’ – Visitors are no longer only looking for fun and excitement
when they visit an attraction. There is a growing trend among visitors to want
to learn new things. If developed and managed correctly, museums and
attractions that combine education and entertainment will have a competitive
edge.
d.) Interactive experiences – Instead of passively visiting an attraction, visitors
are expecting a more interactive and participative experience, eg feeding the
animals or throwing a pot.
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Theme Parks and Attractions
The management
A well-qualified and experienced management team is critical to the success of an
attraction. Factors that contribute to success include:
•
Experienced management – A successful visitor attraction needs a team of
experienced managers across all aspects of the operation including finance,
marketing, human resources and strategic planning. This management team should
have relevant working experience and must be creative and flexible enough to
handle the different day-to-day operational challenges.
•
Strong marketing team – There should be a strong marketing division which is
good at:
a.) Market research
b.) Identifying potential market segments
c.) Long-term strategic planning rather than focusing only on short-term tactical
approaches
•
Pro-active management – Management and staff should be pro-active to respond
more quickly and effectively than their competitors to changes in the business
environment
.
•
Continuous monitoring – It is important to regularly monitor the attraction’s
performance for continuous improvements in terms of product offerings, operations
and how the attraction builds its image
•
Sensitivity to market changes – Management needs to be sensitive to the market
place and changes in the business environment, ie political, environmental, social
and technological. Having this knowledge and sensitivity enables more effective
planning for the future.
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Hospitality Marketing
Now, let’s move on to examine the differences between product and service
marketing.
1.2: Product Marketing vs. Services Marketing
This topic introduces the fundamental differences between marketing products and
marketing services. Discussion for the latter will be addressed specifically in the
hospitality context.
By now, you should know that the focus of the marketing concept is to satisfy
customers’ demands, and these demands can be in the form of physical products
and/or services. It is common for people to refer to products as objects, devices or
things and services as actions, performances or experiences. Marketing was initially
developed in connection with the physical products, but with the growing interest in
consumers for services today, selling services have become an increasingly important
component of the marketing concept. Just to give you an idea to what extent services
have affected our global economies: In Australia, Canada, France, Japan, Norway, and
the United Kingdom, 60 percent or more of the gross domestic product (GDP) comes
from services, and the service sector comprises of approximately 85 percent of the
GDP in Hong Kong. It is important for you to know that although the core outputs for
many hospitality organizations are primarily performances or experiences (i.e.
services), it does not mean that absolutely no tangible elements are tied to the process.
For instance, the food and beverages will be considered the tangible element we
experience when dining out in a restaurant.
So, can the hospitality industry directly adopt the marketing practices of those firms
with physical products as their primary outputs? The answer is no, because there are
four characteristics, intangibility, inseparability, variability and perishability, that set
services apart from physical goods (see Figure 2). Now, refer to Table 1 for the four
characteristics of services that make service marketing distinctively different from
product marketing.
5
Hospitality Marketing
Figure 2: Characteristics of Services
Intangibility
Inseparability
Variability
Perishability
Table 1: Service Characteristics of Hospitality Marketing
Service
characteristic
What it means?
Hospitality example
Intangibility
z
Services cannot be
conceptualized or
perceived by the five
senses before purchase.
z
Customers will have no way
to evaluate their meals at a
restaurant until they have
experienced the food and
service.
Inseparability
z
Providers are part of the
z
service experience because
providers and customers
must be present
simultaneously for the
transaction to occur.
z
Customers themselves may
be part of the service
experience because of their
greater involvement in the
production process.
The presence of other
z
customers may become
part of the service
experience.
The attitude of a flight
attendant will influence
customers’ ratings on their
overall experience with the
airline.
Customers that use
automated check-in- and
check-out service provided
by hotels must understand
the system in order to have a
satisfactory experience.
The presence of loud
customers in a restaurant
will influence the
experiences of other
z
z
6
Hospitality Marketing
Service
characteristic
What it means?
Hospitality example
customers.
Variability
z
Quality of services is likely z
to vary (i.e. lack of
consistency) because of the
provider, location, timing,
etc.
z
Perishability
z
Services are not durable
and only last for a short
while; they cannot be
stocked as inventory for
future sales or use.
z
z
Service quality in a
restaurant during peak and
non-peak demand periods
may vary.
Service quality provided by
hotel A in Hong Kong and
Singapore may vary.
An empty seat on a flight
cannot be inventoried.
Hotel rooms that are not
sold today cannot be saved
for tomorrow (i.e. lost
revenues for today cannot
be recaptured tomorrow).
The nature of services will pose distinctive marketing challenges for hospitality
organizations. Table 2 provides you a summary of these challenges and some
suggestions for the industry to tackle the problems.
Table 2: Service Characteristics: Challenges for Hospitality Marketers &
Relevant Suggestions
Service
characteristic
Intangibility
Challenge for
hospitality marketers
Suggestion
To reduce the feelings of
uncertainty in
consumers.
‘Tangibilize’ the intangible - to provide
tangible evidence and images to
customers to strengthen their confidence
about the services before buying. For
instance, a restaurant that offers fam
trips or food trial will provide clues to
customers as to what to expect in terms
of food and services.
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Hospitality Marketing
Service
characteristic
Challenge for
hospitality marketers
Suggestion
Inseparability
To manage the
provider-customer and
customer-customer
interactions.
Because providers and customers are
likely to be part of the service
experience, it is important to recruit the
right people and to train providers
and/or customers to understand the
service delivery system. Additionally,
providers should also try to manage
their customers so that they do not cause
dissatisfaction for others. For instance,
certain restaurants in the USA targeting
at couples or adult buyers have
implemented a “no-kids are allowed”
policy in their premises.
Variability
To manage the quality
consistency.
Good hiring and training procedures are
more likely to increase quality
consistency in the hospitality industry.
Other options will be to standardize the
service-performance process and to
monitor the level of customer
satisfaction periodically.
Perishability
To manage the demand
and supply levels.
To manage the demand level:
a) Use differential pricing to shift
some demand from peak to
off-peak periods. Example:
Some hotels promote discount
prices for weekdays only to
manage their room demands.
b) Cultivate non-peak demand.
Example: Certain theme parks
in Singapore have introduced
night-time attractions and
activities for this non-peak
period.
c) Have a reservation system to
manage the demand level.
8
Hospitality Marketing
Service
characteristic
Challenge for
hospitality marketers
Suggestion
Hotels, airlines, and restaurants
use reservation systems
extensively.
To manage the supply level:
a) Use part-time employees during
peak demand period.
b) Cross-train the employees so
that they can perform various
tasks especially when there is a
labor shortage.
c) Encourage customers to
participate in the production
process. For instance, fast
food companies in the USA
require customers to fill their
own beverages.
I hope what we have covered in this unit gives you a better idea of what it means by
service marketing, particularly in the hospitality context. Here is another example and
an exercise for you before we move on to the next unit.
Concluding example: Ritz-Carlton Hotels certainly understand the importance of
increasing the tangibility of their services. For instance, their front-line staff are
always dressed in professional apparel and its physical buildings are decorated in such
a way to convey a high level of service. Additionally, well designed promotional
materials are used to create a tangible impression for the guests. Ritz-Carlton also
put tremendous efforts in personnel selection and training in order to manage the
efficiency and consistency of their services. Apart from that, the company has
formulated 20 standards of service that frame management’s expectations of
employees. These standards provide guidance to its employees’ day-to-day behaviors,
which are crucial for managing the interactions between the staff and guests. Due to
the perishable nature of services, hotels cannot just add or delete rooms for upcoming
high or low demand periods. As a result, Ritz-Carlton offers various promotional
packages during low demand periods in order to attract more guests.
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Hospitality Marketing
2.3: Market Segmentation
This topic discusses the importance of market segmentation and the ways for
hospitality marketers to segment the market.
What is market segmentation? Market segmentation is actually a strategy whereby the
total market is divided into smaller groups that comprise of consumers who share
certain similarities among themselves. With the understanding of the underlying
commonalities among consumers within groups, hospitality organizations can then
design and implement different marketing programs that meet the needs of specific
groups. Most importantly, market segmentation allows hospitality organizations to
identify those market segments that have the highest propensity to purchase their
services and products so that their marketing resources can be allocated and used
more effectively.
So, how do hospitality organizations segment their markets? Well, there are several
types of variables commonly used for market segmentation, and these are geographic,
demographic, psychographic, and behavioral variables (see Figure 6). To gain a
better view of the market structure, marketers will divide their markets based on any
of the above variables, alone or in combination, from time to time. Table 7
summarizes how each variable can be used to segment the hospitality markets.
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Hospitality Marketing
Figure 6: Market Segmentation
Bases
Psychographic
Geographic
Demographic
Behavioral
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Hospitality Marketing
Table 7: Bases for Segmenting Hospitality Markets
Base for Segmentation
What it means?
Example
Geographic variables
Buyers are divided into
different segments based
on such geographic units
as nations, states, regions,
cities etc.. Buyers’
preferences may vary
because of their
geographic differences.
Most tourism boards
understand the importance
of segmenting the travel
markets based on the
origin of the guests (i.e.
the country where they
come from); it is an
effective way to identify
those places that the
boards should concentrate
on advertising and
promotion.
Demographic variables
Buyers are divided into
different segments based
on such variables as age,
gender, income, family
size, educational level,
occupation, etc.. Buyers’
preferences may vary
because of their
demographic differences.
McDonald’s understands
the importance of
segmenting the fast food
markets based on age; the
company’s Happy Meal
and the “Go Active
Birthday Party” are
specifically targeted at
children.
Psychographic variables
Buyers are divided into
different segments based
on their social class,
lifestyle, and personality
characteristics. Buyers’
preferences may vary
because of their
psychographic differences.
Afternoon tea at the
Mandarin Oriental in Hong
Kong is targeted at the
upper-middle and upper
classes (i.e. the markets
are segmented based on
social class).
Behavioral variables
Buyers are divided into
different segments based
on their knowledge,
Restaurants in Hong Kong
understand the importance
of grouping buyers
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Hospitality Marketing
Base for Segmentation
What it means?
Example
attitude, use, or response to
a product/ service.
Buyers’ preferences may
vary because of their
behavioral differences.
according to the product/
service benefits they seek.
Therefore, atmosphere and
food quality are often
highlighted by luxury
restaurants in their
promotional messages.
Market segmentation is indeed a useful approach to understand the structure of the
hospitality markets better and it helps hospitality organizations to identify the needs of
specific market segments so that suitable products and services can be identified to
suit each segment. All examples in Table 7 illustrate clearly that one of the goals of
conducting market segmentation is to select suitable marketing strategies to attract
new customers and to ensure existing customers’ commitment for repurchase.
Concluding example: The following is a list of initiatives commonly taken by hotels
worldwide; which clearly reflect the ways that the hotel industry segments its markets.
a) A Ladies Executive Floor is exclusively provided for female executive travelers
given that women have accounted for more and more of all business travelers in
many developed or developing countries (Demographic segmentation).
b) Spa has become popular among travelers in recent years. Thus, certain city hotels
(ex. the Langham Place in Hong Kong) have positioned themselves as a true spa
hotel in the region (Psychographic segmentation).
c) Many hotels segment their markets based on the origin of the guests (i.e.
American, Chinese, English, etc.) for effective promotional efforts and advertising
(Geographic segmentation).
d) Many hotels also segment their markets based on their frequency and length of
stay in order to formulate a marketing plan to increase loyalty and frequency of
use even further (Behavioral segmentation).
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Hospitality Marketing
2.5. The Marketing Mix in Hospitality Industry
This topic defines what marketing mix is and it explains the core components of the
marketing mix concept in the hospitality industry.
Once a company has analyzed and collected the information about its business
environment and its markets, it is time for the company to consider its marketing mix
strategies. In essence, marketing mix is a combination of elements that require a
company’s attention when bringing a product or service to the market. For instance,
we will need to consider the types of promotional efforts that are effective for our
newly introduced spa services in the hotel. In this example, decisions about our
promotional efforts are one important element of the marketing mix strategies.
Apart from promotion, what would you consider to be important when addressing
strategies for the hotel’s spa services? Yes, you may also want to price the services
carefully so that you are not over- or undercharging the customers, and we refer to
such pricing decisions as the price mix strategies.
Expanding 4 Ps to 8 Ps in the Marketing Mix
Traditionally, companies need to formulate their strategies around the following
marketing mix:
1)
2)
3)
4)
Product mix;
Price mix;
Place mix; and
Promotion mix.
We also call these the 4 Ps (the “P” refers to the first syllable of each word).
Essentially, addressing the marketing mix is synonymous to making decisions about
selling the RIGHT product/ service (product mix) at the RIGHT price (price mix) in
the RIGHT location (place mix) using the RIGHT promotional tools and messages
(promotion mix). The four Ps were developed initially for the marketing of retail
goods like cars and shoes, at the time when our economy was fueled predominantly
by manufacturing industries. The traditional 4 Ps are considered adequate when we
are trying to market a specific, tangible product - something that the consumers can
touch and feel, and take home with after they purchase it. However, as the bulk of our
GDP now comes from the service industries, such as the hotel, restaurant, banking,
financial institutions and airlines, where the products offered are mostly intangible,
marketing them becomes difficult if we only rely on the traditional 4 Ps in the
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Hospitality Marketing
marketing mix.
For this reason, there is a need to expand the 4 Ps to what is now the 8 Ps. This is to
accommodate the unique characteristics of the service industry that we discussed in
1.2. Thus, marketing mix for the service industry like hospitality and travel are
expanded to include the additional 4 Ps: People, Packaging, Programming, and
Partnership. The 8 Ps framework (Figure 7) calls upon marketing professionals to
decide on the product and its characteristics, set the price, decide how to distribute
their product, and choose methods for promoting their product. They also need to
consider people (employees and customers) who are involved in the service delivery
process, how to package the product and service, what kind of programming to offer
to the customers, and who you would like to partner with to generate more sales
(Table 9).
Figure 7: The Marketing Mix
Product
Partnership
Place
Promotion
Programming
Price
Packaging
People
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Hospitality Marketing
Table 9: The 8 Ps in a Marketing Mix
Additional 4 Ps
Traditional 4 Ps
(common in service economy to
account for the unique service
characteristics)
(as prevalent in manufacturing
economy)
1. Product
2. Place
+
3. Promotion
5. People
6. Packaging
7. Programming
4. Price
8. Partnership
Example: Let us illustrate our 8 Ps by using an example of the food service industry. I
am sure that you must have eaten in a Café de Coral. It is the largest local grown
fast-food chain in Hong Kong. The company claims to use premium ingredients in
their food product and quality control so it can sell at affordable prices. There are
120 restaurants around Hong Kong, so most people can dine in the Café de Coral
outlets that are convenient located (Place). Through all these restaurants, over
300,000 customers (People) are served daily. As the company puts it in their
campaign advertisement: “To serve you better, you can almost find a Café de Coral
branch in any busy district all over the territory: from crowded commercial district
and shopping malls to well-populated estates. You can get our best food and service
no matter when or where you want it”
(http://www.cafedecoralfastfood.com/eng/company/company03.jsp).
The company regularly launches Promotional campaigns to feature new food
items/themes, e.g. Chinese hot pot, Korean theme, etc. The company also does a good
job in packaging the outlet, from the design, decor, to tables and chairs, food display,
to give the overall impression of value for price, and away from a standard fast food
outlet. Café de Coral using Programming technique by promoting "Club 100" where
customers can enjoy non-stop marvelous rewards provided by the "Bonus Point"
Program. Café de Coral also has a limited-time Partnership agreement with the MTR
that if you ride it 10 times consecutively in a week, you would be entitled to a
complimentary breakfast at its outlets. From this example, you can see that marketing
mix is a combination of key ingredients to create an effective product/service package
to reach its target market.
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Hospitality Marketing
Café de Coral is the largest local foodservice company in Hong Kong.
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Hospitality Marketing
Components of the Marketing Mix (8 Ps)
We will discuss each of the 8 Ps in the marketing mix in the following section. We
will spend more spaces to examine the first P, Product because this is the most
important element in the mix: you will need a product or service that fills the needs
and wants of the consumers. Without it, the rest of the marketing mix would not be
able to carry their functions effectively.
First P: Product
In the manufacturing industry, once a product is made in the factory and shipped to
the retail shop, there is always not much of contact between the customers and the
manufacturer after that. However, in the hospitality industry, it is not so clear cut.
We involve customers in the process of service delivery and sales transaction. For
instance, we make the food when the customers waiting in line at the McDonald’s,
ring up the sales, and they take away their food to find seats.
Customers to fast food outlets like McDonald’s is expecting a meal that is consistent
in its quality, fast service, clean environment and affordable. Essentially, this is an
example of a food service company offers customers a combination of product,
service and facilities to its target customers to fulfill their needs and wants.
Customers have different expectations with products and services in different settings
(i.e. Place, Packaging, Programming, People, etc.). For instance, consider these two
scenarios: 1) Selling a cup of milk tea in a local diner for $7 to a construction worker
on his tea break or a housewife on her way to the market versus 2) Selling a cup of
Earl Grey tea in the Peninsula Hotel lobby for $40 to a Japanese tourist. Both set of
customers in the two different settings of food outlets would consider they are getting
what their money worth.
The construction worker quenches his thirst and gets a boost with the caffeine and do
not expect too much from the atmosphere of the diner for that price. On the other hand,
the Japanese tourist gets what he pay for the tea (Product) plus the pleasant
experience of “to see and to be seen”. The doorman, the fleet of Rolls Royce outside,
the hotel ambience (Packaging) and the live band (Programming) in the lobby make
his visit very memorable.
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Hospitality Marketing
All products have tangible and intangible aspects. The tangible part of the product is
the physical object that you can touch and feel and take it with you, such as buying a
pair of shoes from a department store or a plasma TV. When you buy a car, you are
getting the tangible part of product, the car. So you look for the product features
primarily. But you may also look or go for certain brand because of its good after-sale
service aspect as an add-on (or peripheral) feature. So a reputable car manufacturer,
like BMW or Porsche, is known to provide good service to its car owners.
However, in the service industry like hospitality and tourism, what we offer in terms
of product is largely intangible. In fact, in the hospitality industry, our products are
mainly in the form of services, which make the product of the industry quite unique as
compares to other industries. This is the experience and service that you have paid for,
for example, taking a vacation trip to Europe. Once the trip is over, you are unable to
take the product away except the pleasant experience that lingers on. This is the same
when you go to a fancy restaurant in the IFC (International Finance Centre) Mall or
having high tea in the Peninsula lobby, you are not only buying the meal (Product) but
also experience, the ambience, decor and the service that are provided by the
restaurant.
By now, I hope you have a clear idea of the difference between the two terms:
“Product” vs. “Service”.
In the discussion of the concept of Product, we will also differentiate the core product
from the supporting product and facilitating product; examine brand name as a
guarantee of product and service quality and image; and point out that analogy of
product to human beings that it also goes through different stages of the product life
cycle.
The core product, supporting product & facilitating product – As core product is
really what customer is getting, supporting product is extra products to offer the add
value to the core product itself and to help to differentiate it from the competitors.
Facilitating products are the goods or services that must be present for the guest to use
the core product. To put it in another way, not only that we sell a core product like the
computers, but in the hospitality industry, we also feature supporting product and
facilitating product.
In fact, customers come to us for an expectation of a wonderful experience that
combines all these elements. For example, Starbucks’ core product is selling coffee
that will satisfy the consumer’s need for a beverage with caffeine. The facilitating
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Hospitality Marketing
product of a Starbucks will be the convenient locations which make it easy for
consumers to buy their coffee. In this case, Starbucks is mainly available at CBD
(central business district) areas. This is where its major target client, the white collars,
works as compares to some other suburban districts. The supporting product for
Starbucks will be providing free magazines, newspapers and the Wi-Fi system for its
customers to access the Internet using personal laptop computers or mobile phones.
Exercise 11: Let us do the following exercise to help you grasp the concept that we
just discussed. The hospitality industry offers products and service to appeal to
different target markets. Customers for these markets have different expectations in
their needs and wants. If you have a good understanding of your customers’ needs and
wants, then you can use the right marketing mix to reach them and offer products and
services that would meet their expectation. For each target market of customers in the
following table, describe the parts of the hospitality products/services to satisfy their
needs.
Starbucks’ Product
Core
Supporting
Beverage with caffeine
Electronic gadgets
Relax
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Facilitating
Hospitality Marketing
Different Target Markets have Different Product/service Needs
Target Market
Hospitality Products/Services
Families
•
•
•
•
•
•
•
•
•
Business Executives
• 24 hours room service
Rooms with more space
Reasonable rates or no extra rates for children
Low cost recreational facilities
Room with kitchen facilities
Kiddie menus
Colourful interior rooms
In house doctors
Baby sitting facilities
All inclusive packages
•
•
•
•
•
Internet connection
Business centre
Airport pick up
Conference room
Quality service
Female travelers
•
•
•
•
•
Safety is the primary concern
Quiet floors
Bathroom with good lighting for make up
Hair dryers, iron boards, etc.
Spa and health club
Retirees
• Clean and comfortable room, lounge areas, and
public areas
•
•
•
•
•
Rooms with two separate beds
High safety and security measures
Easy access rooms closer to elevators
Elderly care facilities
Large well lit rooms and non slippery floors
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Hospitality Marketing
Brand Name as a Guarantee of Product and Service Quality and Image
When we talk about the concept of product, we must mention the term, brand. In the
service industry like the hospitality where the product we offer is largely make up of
intangible elements, brands are especially important in a marketing mix. Customers
rely on the brands of the product and service to give them a clue of the consistency in
quality. Brands are defined as unique elements which can be identified easily with a
product and set the product apart from the other competitors.
Branding is considered as a product characteristic because the brand is used to attract
the awareness of the product in the consumer’s mind. Dragon Air commands higher
airfare than other airlines in China because the brand carries an image of good safety
record and service where the safety-conscious consumers are willing to pay for the
premium. Nowadays, brands have become increasingly important for a company’s
marketing strategy, mostly because having a well-known brand tends to create brand
identity. Many hospitality companies are easily recognized by the brand name for
their products and services.
For example, in the fast food sector, we normally come across with the international
brand names such as McDonald’s, Pizza Huts, KFC, etc. In fact, the golden arches of
McDonald’s is well-recognized in every part of the world. In Hong Kong, we have
local brands like Café de Coral, Maxims and Fairwood. The consumers know exactly
what they are getting each time in terms of product and service, when they patronize
these food outlets, no matter where they are in the world.
A hamburger purchased in McDonalds’ at Beijing supposedly to taste the same if you
buy it in Johannesburg, South Africa. In the hotel industry, we have brands like
Marriott, Shangri-la, InterContinental, Hyatt, Holiday Inn, each creates a different
image in the travelers’ mind. Often, different companies have different target markets.
Consumers of these brands have different expectations of the products and services
the companies offer. For example, people who choose McDonald’s are mainly looking
for quick meal and economical price. Their expectation would be different if they
patronize a fine dining French restaurant like Caprice in Four Seasons Hotel.
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Hospitality Marketing
Exercise 12: Go online and find a hospitality company: a hotel, a restaurant, or a
travel agency. Think about the company’s target market and its brand image that it
sets out to create. Does the company emphasize its brand image? Why or why not?
The company is currently at which stage of the product life cycle? What are your
recommendations for the company to enhance its product image?
Are you ready for the rest of the Marketing Mix? Good, I am glad that you are. Let us
move to the second P.
Second P: Place
After the Product, Place is another important aspect in the marketing distribution
channel. Once a product is made and is available for sale to consumers, ‘where to sell’
becomes a critical decision. Imagine this: You may have the best product in the world,
but nobody can access to the remote Place where the product is sold, you still would
not have any transaction. Thus, Place is where an organization selects to place its
product and service so that its target consumers can easily get hold of it. In the
hospitality and tourism industries, one would often hear the expression of “location,
location, location” which is critical to the business’s success. Take a guess: Where is
the most expensive rental for a shop in Hong Kong? You guess it! It is a small shop in
Causeway Bay that sells freshly squeezed fruit juice and street food. The owner pays a
premium-plus rental monthly because it locates in the intersection of a street with a
very heavy pedestrian traffic. After paying the high rental cost, he still makes a good
profit because of the businesses that brings in by this superb location. Another
example is the Cafe Landmark where it is located inside the Landmark shopping with
one of the highest rental in Hong Kong.
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Hospitality Marketing
Cafe Landmark which is located in the heart of CBD area in Hong Kong.
The decision on the Product and Service to sell determines the location that you select.
For example, you would only find Four Seasons Hotels and Resorts in major gateway
cities around the world. Why? This is because only these cities can afford enough rich
clientele that appreciate its product and services and willing to pay the premium.
Similarly, for a restaurant that locates in a prime “A” location is definitely attracts
more foot traffic than a “B” location on a side street.
On the other hand, there are also times that location determines the product or service
that you would offer. Hotels built as center city hotel, resort hotel, airport hotel or a
motel along the highway are pretty much determined by the locations that they are on.
This in turn dictates the type of clientele that these hotels will attract. Similarly, the
recently opened Asia Expo in Lantau Island definitely attracts different set of
customers than the one that Hong Kong Convention and Exhibition Center at Wanchai
due to different locations.
There are many factors to consider when we determine the right location for our
hotels, restaurants or theme parks. These factors include, accessibility, traffic pattern,
supporting infrastructure, establishments (e.g. hospitals, schools, office buildings,
residential and etc.) in the vicinity, demographics and income distribution of the
people living in the area. If you choose to put your restaurant next to an office
building, a factory, a hospital or even a school, you are guaranteed to have businesses
from these establishments. We also need to consider number of direct competitors in
the radius where you want to draw your customers. For example, picture an exotic
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Hospitality Marketing
resort locates at a remote area where there is no good infrastructure to support it.
People cannot get to it easily, surely it will not be as crowded as it wishes to attract.
Moreover, location does not mean that it has to be stationary and permanent.
Sometimes, the Place comes to your doorsteps, such are the cases of pizza or KFC
delivery. We can also expand the business beyond the Place (on premise) by having
facility built in to facilitate customers do take-out orders.
A delivery motorcycle for Pizza Hut.
We need to remember that a good location at the time when you open for business
may not be a good location for ever. You must constantly monitor trends in the town
planning to keep track of any changes that may affect you. Take the example of Regal
Hotel at the old Kai Tak Airport. Built across the old airport, the hotel was established
to target to the tourists that used the airport and did a good business then. As soon the
new airport at Chek Lap Kok opened in 1997 and the old airport at Kai Tak stopped
operation, Regal Hotel has lost its competitive advantage and is forced to change its
target market to survive.
Third P: Promotion
Now that we have the product that the consumers want and good location to sell it, we
need to consider the third P in the Marketing Mix: Promotion. A company has a good
product is not enough; it will not generate any sales unless the consumers are aware of
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Hospitality Marketing
the product’s existence and also can access to the product. This is where Promotion
comes to play its part. Promotion helps to get the message of the product out so
consumers are aware of it and want to purchase it.
There are many promotion tools that you can consider to market your product. These
tools include: Advertising, sales promotion and merchandising, personal selling, and
public relations. Each of the tools has its functions, cost and disadvantages.
Hospitality organizations can consider these tools to match their product nature, the
brand image and the stage of life cycle.
1) Advertising is the communication to target markets that are paid for by
hospitality companies. It ranges from television commercials, to radio and Internet
advertisements, through print media such as newspapers and magazines, and
billboards. The type of advertising that you use to promote your product will
depend on your marketing budget. Each of these forms has its advantages and
disadvantages and you have to decide what suits your product the best. Some
types of advertising, like television commercials are very costly while other types
like the company website on the Internet can be relatively cheap. It also depends
on the economy of scale if you have many hotel properties.
With the 250+ McDonald’s restaurants in Hong Kong, it is economical to share
the advertising cost. Among the TV commercials would be prohibitive if you only
have a single hotel or an independent restaurant. Through advertisement, you can
build a brand image, increase the awareness of the product or the sales promotions
of the product. Moreover, the type of advertising that you use when you first
introduce your product to the market may be different when your product is at its
maturity stage of the product life-cycle. This is because you want to send different
messages about your product to your consumers during the stages of its life cycle.
When Wynn Hotel and Casino opens in Macau in 2007, it took out a full-page
advertisement in the newspaper to announce its grand opening.
2) Sales promotion and merchandising is a short term inducement to motivate an
immediate purchase of a product or service. You do this either to introduce a new
product to the market or to boost sales of existing product. Sales promotion tools
include offering discount coupons, contests and sweepstakes, free samples, and
premiums. In the hotel industry, a “buy three get one free” offer for dining at a
hotel for dinner buffet is an example. Some hotels have the “Happy Hour Drink
Buffet” where diners can enjoy the all-you-can-drink beverages for a special price.
This is usually effective in creating excitement about products among the guests.
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Similarly, restaurants may offer “early bird” special to senior citizens if they have
their dinner before 7:00 p.m. so to generate business during slow meal period.
Around July every year, department stores like Marks and Spencer and the like
have a sales promotion on its merchandise up to 50% off on summer clothes so it
would have room for the fall series. Sometimes a company may join hands with a
partner to conduct sales promotion on their product, e.g. Hang Seng Bank joins
hand with Ocean Park and offer discount on the price of the admission ticket if
you purchase it with its credit card. As merchandising is the in-house displays
which use to stimulate the sales for the company. For example, Starbucks is using
the merchandising technique to sell the coffee beans, coffee mugs and coffee
machines in their stores, rather than just selling freshly brew coffee.
A Pizza Hut’s discount coupon from the newspaper.
3) Personal selling is the interpersonal process of where a sales person does his best
to persuade the consumer to purchase his product. The sales force of a hotel may
contact its corporate clients from time to time to promote hotel rooms, banquet
service and/or meeting spaces. They also do cold calls to potential customers.
These sales calls give the hospitality firm exposure and provide information to
potential clients with arrangement of conference and banquet functions. They can
also answer questions the clients may have and for better understanding of their
products or services.
4) Public relations is the communication that results from activities organized by a
hospitality or travel organization which it does not directly paid for. These include
press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs
and events. The function of public relations is to have a good relationship with all
the stakeholders that it serves. Different from advertising or personal selling, there
is usually no direct sales result from activities of public relations, but the impact is
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more of long term. For example, the Public Relations department of a hotel
usually has close relationship with reporters and invites them to sample new
product or campaign so they can write feature articles about it. Hong Kong
Tourism Board may invite travel writers in target markets to have a familiarization
trip to Hong Kong so they can write travel articles when they return to their home
countries. Ronald McDonald’s House of Charities is part of the public relations of
McDonald’s. The aim is to build positive image in the local community as a good
corporate citizen. The annual marathon sponsored by the Chartered Bank becomes
a great public relations activity for the company. Through activities like the
marathon, the bank sends out a “we care” message to participants and the citizens
alike which extends beyond its regular banking line of business.
We will discuss Promotional mix in more detail in 2.6. Regardless of which type of
promotion tools that you select for your product, the function of promotion is to create
expectations in the consumers’ minds that your product can satisfy their needs and
wants. It also creates an image in their minds that your product is one of a kind that is
apart from other competitors. This can be from the Product itself, or the Place, or from
the Pricing standpoint. Let us now turn our attention to the next P, Price.
Fourth P: Price
How much do you want to sell your product and service? Or put it another way: how
much should you charge that you think your customer would pay and yet you still
make a profit? Price is the monetary value that you charge to cover the cost of the
product plus the other costs associated with the product, such as labor cost,
promotional cost, etc., plus a profit. The decision on pricing would make or break
your business. Consider this: If your price cannot even cover the cost to produce it,
you will operate in a loss and eventually go out of business. On the other hand, if the
price you charge is so high that it may drive you out of the market.
Price also conveys the message to the consumers that indicates the price-quality
relationship: The higher the price, the better the quality. You also pay for the brand
name rather than just the product itself. Take Louis Vuitton handbags as an example,
the $10,000+ price tag is associate with status symbol. On the other hand, there are
some companies that choose to mark up their product slightly than the cost in order to
go for the volume in sales. For example, consider a $200 hotel room per night versus
staying in a hotel room that charges $2000. What is the difference of expectations for
the customer who pays for the $200 hotel versus the one who pays $2000 a night?
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Often times, customers are willing to pay premium for a product that they perceive to
be of good value. The closer the price to value relationship, consumers are more likely
to be satisfied and likely to have return purchase. For example, a Valentine’s Special
for a romantic dinner at a five-star hotel’s restaurant is often fully booked even though
the price is several times higher than in regular time. We can also use pricing as a
promotional tool. Take this example: to celebrate the 120th anniversary of The Peak
Tram, the return-journey fare is set back to what was charged in 1888, which is only
thirty cents. Over 6000 tourists and residents queued up for the world's oldest and
most famous funicular railways.
Pricing Methods: How much to charge for a product or service is an art and a science.
It is a science because you can charge the price based on the cost calculation and mark
up accordingly. It is an art because the price is more than the cost of the product, it is a
combination of company philosophy’s on its image, competition and customer
demand which determine what the market would bear. You can consider using any of
the several pricing methods in Table 11.
Table 11: Different Pricing Methods
Prices are
determined
by the
customers
demand
The price is not based on production costs, but by the demand in the
market.
Value pricing
It is focus on the consumer’s perception of good value for the money
they pay for the product/service they receive.
Example:
For some hotels, since their main target markets are business
travelers, they find it difficult to fill up their rooms during weekends.
As a demand-driven pricing technique, some hotels tend to offer
weekend getaway package at a special rate to fill up the hotel rooms.
Example:
Some people are willing to pay for $5,000 a night at a five-star hotel
for the elegant lobby, the luxurious-designed room and personalized
service; however, some people are only willing to pay for $500 a
night at a motel or a three star hotel just for a basic, clean room.
Negotiated
pricing
It is often use in the hospitality industry. Price is open for negotiation,
you may not have to pay for the fixed amount given the right timing.
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Example:
A couple plans to have their wedding banquet at a hotel. With a
budget of $500 per guest, they may discuss with the caterer and
negotiate for the menu items and service level they want at an
agreeable price. Similarly some travelers like to bid for the lowest fare
they can in Travelocity on the Internet for their last minute hotel
rooms.
Quantity
discounts
These are frequently given to customers who purchase a large amount
of a product or service.
Example:
Each year, travel agencies will get discounts for group rates on hotel
rooms, air-tickets as a promise for a pre-determined volume.
Cash
discounts
They are given to the customers when they make a cash purchase for
a product or service. The seller can use the money to invest and make
money, which something the seller misses out on when allowing
creditors a long time to pay.
Example:
In hospitality industry, suppliers often offer cash discount of up to
10% to companies for prompt payment of invoices, usually within 30
days.
Seasonal
discounts
They are widely used by hotels, resorts and airlines, discounts are
given during times when the demand is low.
Example:
Airlines offering off-season rates for air tickets during school year.
The airfare is cheaper when compare to summer holiday where
families travel with their school-aged children.
Two-part
pricing
It is the two different components of the total price paid.
Example:
You have a membership for the club house of the apartment that you
live. The membership fee usually consists of the initial fee as well as a
fixed monthly dues to use the facilities.
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Pricing by
priority
It usually implies for those customers who are paying the most to be
among the group of first priority.
Examples:
Airline ticket seats and concert tickets, where prices are initially high,
but eventually will get lower as time approaches the take-off time or
curtain time. The company would drop the prices may be
considerably at the end so it can sell the remaining places or seats to
last minute bargain-hunting travelers.
When iPod was first introduced in the market, the prices are much
higher than it is now after mass production and new technology drive
down the price.
Price
bundling
It is two or more products or services being combined together and
sell as a package.
Example:
Visit Macau package is a good example: The price of the trip includes
a round-trip of TurboJet, hotel accommodation, free shuttle bus to and
from the hotel and free half-day tour to the local attractions. It is
priced less than if they are purchased separately.
To find the optimum pricing for your product or service is not an easy task. In
addition to the material cost and other costs that associated with it, you must find a
price level that the market would bear. In other words, pricing will depend on the
competition and also the supply and demand situation of the market.
We will examine the next element in the Marketing mix: People.
Fifth P: People
Picture this: With the right product, superb location and a price that is right for the
target market, an effective promotional tool to reach the market with the right message,
customers are at your door to buy your product or services that you have to offer. This
is a scenario every merchant and company would like to see. Here comes the moment
of truth. Customers come with their expectations of the product and services. How
their expectations are met, whether customers enjoy their visit, have a good
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experience and vow to return to your property will entirely depend on one thing: your
employees. We all know that hospitality industry is a people business, where service
is provided by
employees within the organization to their customers. People in the
hospitality marketing mix means employees as well as customers.
In the hospitality and tourism sectors, employees must do two things:
1) To provide good product to customers such as: meal, room, airline seat, holiday
package, rental car and etc.
Airport lounge for business travelers
2) To provide good service of a standardized service quality.
The quality of the product is very important but the quality of service is equally
important. For 5-star hotels, Grand Hyatt Hotel and InterContinental Hotel may have
similar hardware in terms of facilities (fancy lobby and elegant ballroom, swimming
pool and spa, diverse food outlets, etc.), however, what makes it different between the
two hotels may lie in the personalized service that its people deliver. For example, for
those of you who have been to Hong Kong Disneyland or The Peninsula Hong Kong,
you may notice the standard of the quality of services offered. There is a strong
relationship between marketing and human resources as people are the most essential
resource of a company and it is important to recruit the service-oriented employees.
Nowadays companies consider People to be its human capital, rather than a cost.
For this reason, a company has to commit to training of employees and develop them
professionally. Employees come from a diverse background so the company needs to
provide standardized operating procedure to ensure consistency delivery of product
and service every time. The company also needs to provide a conducive working
environment for their employees to learn and grow. We can sense this from the credo
of Ritz-Carlton Hotel which is “ladies and gentlemen serving ladies and gentlemen”.
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People in the hospitality industry also mean customers. Like aforementioned (Table 1
in 2.1), in the service industry, customers are partial employees where they are part of
the service delivery
system.
Just
like
employees,
they
come with different
family, educational
and
religious
background,
and
even nationality. They
have
different
expectations and the
company’ job is to
manage
that
expectation
and
make sure customers
are satisfied with
the
products
and
services.
Customer needs a quick meal
Front-line employees give customers first impression of the company. If customers
are happy, they will tell their friends by word of mouth, but if they are not happy with
their experience, they also would not mind to repeat the unpleasant incident with their
friends. Thus, there is a need to ensure the service encounter between the two parties
(employees and customers) meets the company standard. For example, to ensure good
service, a telephone operator must answer his phone within three rings.
OK, so much for People. Let us move on to the next P. Close your eyes for a minute
and visualize this: When you were a kid, how many times that you refused to eat some
unknown food or food that has strange color, shape or form that your mom prepared?
Just look at your plate, you decided that it would not taste good. That is why we say
that we eat with our eyes. This brings out the importance of Packaging, our 6th P.
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Sixth P: Packaging
Packaging “epitomizes a marketing orientation. It results from finding out what
people need and want and then assembling various services and facilities to match
these needs. It is the combination of related and complementary hospitality service
into a single-price offering” (Morrison, 2002, p. 314). To provide good product and
services is a must, however, good packaging is equally important, so it will appeal to
consumers’ needs and wants. The elegant design of a box of Godiva or agnès b
chocolate denotes high quality and luxurious status that consumers are willing to pay
premium price to enjoy themselves or as gifts.
Similarly, the blue color of the Tiffany’s jewelry box becomes its signature color and
consumers around the world associate it with high quality, brand, status and willing to
pay for high price. Japanese are known for their aesthetic packaging of food products.
Customers not only find the food taste good but also pleasing to the eyes.
A pretty metallic pink metal box for agnès b’s chocolate.
For service industry like hospitality and tourism, where we offer products that are
largely intangible, packaging is also seen as overall presentation. We need tangible
items to give consumers a sense of the quality for the intangible service that we offer.
In other words, tangiblize the intangible, so to speak. Travelers equate the sharp and
neatly pressed uniform that flight attendants wear and their smile the feeling of a
pleasant journey.
A mint left in the pillow by the room attendant after the turn-down service is also a
reminder of the personalized service a 5-star hotel provides. A hotel chain in the
United States, Doubletree would give their customers, upon check-out a bag of
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home-made chocolate chip cookies to take home, to remind them of the pleasant stay
they have in the hotel. The packaging gives consumers an indication of quality
standard and reduces the uncertainty that is associated with purchasing product and
service that are mostly intangible, that you cannot touch or feel.
Good packaging entices customer’s desire to purchase. However, in the hospitality
and tourism industry, a customer’s total experience of the product and service that you
offer would not be complete if there is no good programming. Now let us spend some
time to discuss what Programming is all about.
Seventh P: Programming
Your family just booked a cruise ship for a family reunion. You will be spending 7
days in a ship. What is your expectation with this type of travel? Non-stop food
offerings, clean cabins, swimming pool and yes, lots of programming on the ship.
Programming in a cruise journey is very critical because the guests are basically
captive audience while on abroad between ports of call. The seventh P, Programming
deals with the development of special function activities, events, or programs that
stimulates customer spending or give added value to a package or other hospitality
service as an incentive.
Gaming operators often program their
properties into a multi-functional hotel
or resort. For example, a gaming
resort target its markets to both
gamblers and family.
If Packaging entices a tourist to visit a
destination,
then
Programming
provides him a pleasant experience and makes him wants to stay longer or even return
for the second time. To boost sales, there are many packages that one can develop and
offer. For example, Star Cruises offers the cruise ride to the guests and also offering
them live entertainment such as musical shows and magic shows as their its packaging
and programming techniques.
Similarly, in promoting Hong Kong as a tourist destination, Hong Kong Tourism
Board works hard to offer different activities, parades, events and festivals to give
tourists a reason to visit all year round. Some programs are suitable for tourists who
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only has one day to spare, some with longer period of time. Some activities and
attractions may be suitable for tourists that are interested in cultural heritage or
eco-tourism, while the other may go for golfing, hiking or other recreational sports.
Halloween Bash in November in Ocean Park provides a good programming for
youngsters and the young at heart a fun and scary activity to visit the park. Even
shopping malls in Hong Kong attract a bigger crowd with theme programming to
celebrate Christmas, New Year and major festivals like Valentine’s Day, Easter, etc. In
Asia, many people go to the Philippine for snorkeling activities or riding elephants in
Thailand.
Now that we understand the role that each of the 7 Ps plays in the overall Marking
Mix, we are ready for the final P: Partnership.
Eighth P: Partnership
What is partnership and why is it important as part of the marketing mix?
Partnership is cooperative promotions and marketing efforts by two or more
hospitality companies to enhance sales of their products. Again, this is important in
the service industry because of the mostly intangible nature of its businesses. By
partnership with other tangible products or with companies with proven reputation of
good quality, it would reduce the perceived uncertainty by customers and they would
be more willing to try your offering. Often times, it is one company forms a closer
relationship with its operator-customer, in order to increase the profit and awareness.
A wine tasting session provides a useful example. The wine maker provides the
restaurant with wines for tasting, free of charge or a fraction amount of money, as well
as promotional materials such as booklets, regional wine maps, table tents, posters and
CD-rom. This can motivate diners to go to the cellar for wine tasting and likely to
order wine while having dinner after wine tasting. The wine tasting provides an
excellent kick-off for a new wine list and a campaign promoting the sale of wine with
dinner.
In airlines industry, partnership can be seen in the form of loyalty or frequent flyer
program. To encourage travelers to fly more often with their companies, this type of
program allows travelers to accumulate their air mileage. Eventually they can use
these mileages to redeem a free ticket or receive free gifts. To be attractive to travelers
and share operating costs among companies, a group of airlines join partnership in the
program. United Airline has its own frequent flyer program for its loyal customers,
while it also belongs to the Star Alliance Program. Its counterparts, Asia Miles is
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popular among Asian travelers. Some Asia Miles members include: Cathay Pacific
Airways, Finnair, British Airways, Dragon Air and etc. Star Alliance members include:
Air Canada, Thai Airways, Air China, Lufthansa and so on. These are examples of
such program where different airlines join partnership in one program so they stay
competitive. Moreover, many hotels form partnership with airlines in their frequent
flyer program. If you become a member for the Asia Miles, a loyalty program where
Dragon Air and other Asian airlines belong to, you may also earn mileage if you stay
in designated hotels. You can also earn airline mileage each time you use certain
credit cards to pay for your purchases. Essentially, you want your customers to feel
that you are offering them more value for their money, or give them more reasons to
purchase your product or services.
Different types of frequent flyer membership cards.
As you can see, each component or P in the marketing mix has its functions and is
equally important to the overall success of bringing your product and service to the
market. Marketing Mix is about a series of critical questions you have to consider
regarding your product and services. These include: Choosing what to sell (Product
and services), where to sell it (Place), how to tell customers about your product
(Promotion), how to sell it (Packaging), how much you would sell it for (Price),
who will sell it for you and who your target customers are (People), what kind of
activities you will offer associated with your product (Programming), and finally,
who you would invite to be your business partners to create more value for your
customers (Partnership).
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