Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Chapter 1 Introduction: Marketing for Hospitality and Tourism

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ The Purpose of a Business Is to Create and Retain the Right Customer

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ The Four Ps Marketing Mix Product Price Promotion Place (Distribution)

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ The Promotional Mix n Advertising n Sales promotion n Packaging n Personal selling n Public relations

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Defining Marketing Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products and value with others.

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Core Marketing Concepts Needs, wants, and demands Products Value, satisfaction, and quality Exchange, transactions, and relationships Markets

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Need, Wants, demands Need. A human need is a state of felt deprivation. Examples include the need for food, clothing, warmth and safety. Wants. Wants are how people communicate their needs. A hungry person may want a hamburger, noodles, or cheese and bread. Demands. When backed by buying power, wants become demands.

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Product A product is anything that can be offered to satisfy a need or a want.

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Value, Satisfaction, and Quality Customer value is the difference between the benefits that the customer gains from owning and/or using a product and the costs of obtaining the product. Customer satisfaction depends on a product’s perceived performance in delivering value relative to a buyer’s expectations. Quality begins with customer needs and ends with customer satisfaction.

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Why Satisfaction May Not Lead To Customer Loyalty Some customers never return to an area – but they can still recommend Some customers shop for the best price - differentiate your product Some customers like to have different purchase experiences – like to stay or dine at different places

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Why Managers Should Be Concerned About Customer Loyalty Customer loyalty leads to increased profit Customer loyalty leads to increased partnership Lower marketing and sales costs

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Exchange, Transactions, and Relationships Exchange is the act of obtaining a desired object from someone by offering something in return. A transaction is marketing’s unit of measurement and consists of a trade of values between two parties. Relationship marketing builds relationships with valued customers, distributors, dealers, and suppliers by promising and consistently delivering high-quality products, good service, and fair prices.

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Importance of Customer Retention n 5% increase adds % to bottom line

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ The Life Time Value of the Customer n Revenue and profits by average customer over a lifetime by segment n Increase average purchase, frequency of visit, life

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Example n Corporate business traveler - 4x a year, 2 nights per visit, $200 per visit = $800 a year n Average life is 4 years n 4 yrs x $800 = $3200 lifetime value

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Markets A market is a set of actual and potential buyers who might transact with a seller. A market is a set of actual and potential buyers who might transact with a seller.

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Marketing and Sales Concepts Contrasted Factory Existing Products Selling and Promoting Profits through Volume The Selling Concept Starting Point FocusMeansEnds Market Customer Needs Integrated Marketing Profits through Satisfaction The Marketing Concept

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept Consumers favor products that are available and highly affordable. Improve production and distribution. Consumers favor products that offer the most quality, performance, and innovative features. Consumers will buy products only if the company promotes/ sells these products. Focuses on needs/ wants of target markets & delivering satisfaction better than competitors. Focuses on needs/ wants of target markets & delivering superior value. Marketing Management Philosophies

Marketing for Hospitality and Tourism, 3e©2002 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Marketing’s Future “It (marketing) encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer’s point of view.” Peter Drucker Marketing has become the job of everyone.