1. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Chapter Eighteen Hospitality Distribution Systems: Bringing the Product to the Customer

2. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Distribution Channels and How Distribution Channels Work  All channels between the firm and the customer that increase the probability of a purchase  Hospitality has reverse channels: we need distribution systems to get customers to come to us

3. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Distribution Channels and How Distribution Channels Work (cont.)  Brands –Managed and marketed by the brand and conform to strict standards –Connected to the Global Distribution Systems (GDS) and the Internet –Attend trade shows and manage sales offices

4. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Distribution Channels and How Distribution Channels Work (cont.)  Representation firms –Companies that market a hotel for a fee –Usually used by independently owned properties –“Soft brands” –Usually paid on a retainer basis or after the customer sales take place –Can be cost effective for large organizations to hire firms to cover feeder cities

5. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

6. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Distribution Channels and How Distribution Channels Work (cont.)  Manufactured goods –Wholesaler, broker, retailer = distribution system –Internet allows direct sales to customers, or disintermediation  Has allowed for creation of new intermediaries  Hospitality firms –The manufacturer is the retailer –Simultaneous production and consumption –Requires different distributors: geographic and virtual distribution

7. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Distribution Channels and How Distribution Channels Work (cont.)  Structure of distribution –Vertical integration: won the suppliers for raw materials as well as the retailers who sell the products  Rare in manufacturing  Full integration  Partial integration

8. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

9. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Distribution Channels and How Distribution Channels Work (cont.)  Vertical marketing system: any unified combination of suppliers, producers, wholesalers, or retailers working together –Corporate –Administered –Contractual

10. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Different Business Models that Bring the Product to the Customer  Ownership of facilities –Own and have others manage –Typically hire former hoteliers; an “asset manager”  Management and ownership of one facility or multiple facilities –Provides the brand name with the best integrity –Customers will more likely find consistency –Expansion is more difficult

11. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Different Business Models that Bring the Product to the Customer (cont.)  Management without ownership –Next to best for maintaining quality –Operate under a management contract –Financial and place benefits for the management company –Owners might let physical facilities deteriorate –Owners might change management companies

12. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Different Business Models that Bring the Product to the Customer (cont.)  Franchising –Used to increase distribution network –Franchisor control varies widely –Advantages  Brand recognition  Comprehensive reservations network

13. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

14. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Different Business Models that Bring the Product to the Customer (cont.)  Franchise support –Technical knowledge –Managerial techniques –Marketing support –Financial support  Franchise support –Safeguards –Auditing –Reservation system –Sales support

15. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Different Business Models that Bring the Product to the Customer (cont.)  The future of franchising –Need to provide greater services to franchisees –Customers’ inability to differentiate between franchises and other ownership properties –Different philosophies by brand –“Reflagging” –Advantages and disadvantages

16. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Different Business Models that Bring the Product to the Customer (cont.)  Strategic alliances –Companies that form strategic alliances with other companies that have complementary customers for more exposure and faster growth –Examples:  SAS Hotels and Radisson  Universities and sporting goods companies or soft drink companies

17. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

18. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Different Business Models that Bring the Product to the Customer (cont.)  Restaurant distribution –Send the product to the customer  Take home  Home delivery  Hotel delivery  Takeout Taxi

19. © 2007 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition