PT305 International Marketing for Travel and Tourism- Goring Hotel

Read the case Study on History of The Goring

Answer

Introduction

Nowadays, international marketing is considered as an important aspect for the growth of a particular business (Hair and Lukas 2014). Therefore, in this report, the case study regarding a U.K. based company named Goring Hotel has been studied in detail. The particular firm was built by the great-grandfather of Jeremy Goring i.e. Otto in the year 1910. The specified hotel is situated in the Buckingham Palace that is currently known as Beeston Place. The Goring Hotel is the favorite address for the people and this English luxury hotel is located at the center of London. It is comprised of The Goring Gardens (one among the largest private garden in capital), Lounge Bar, 69 luxurious rooms and suites. Therefore, in order to expand its business, the firm intends to enter international market. In this report, the present condition of the firm has been studied in detail and along with it, the international market has also been studied, such that the particular business can enter and establish within either of the two new international markets i.e. India and Nigeria.        

Situation Analysis of Goring Hotel

Background of the Company

Goring Hotel is an U.K. based firm that was established in the year 1910 by the great-grandfather of Jeremy Goring named Otto. It is located in the Buckingham Palace and this is presently popular as Beeston Place. Moreover, this is considered as the English luxury hotel, which is located at the center of London. Goring Hotel possesses 69 luxurious rooms and suites, The Goring Gardens (one among the largest private garden in capital) and Lounge Bar.        

Macro Analysis (PESTLE)

The macro analysis of the worldwide hospitality industry has been done based on the PESTLE analysis as this analysis helps in understanding all the political, environmental, social, technical, legal and economical aspects of the sector (Walker 2014).

It has been found that the pragmatic and the positive cooperation with the governments of various countries has resulted into key success of the hospitality sector as a whole and thus, the firms of hospitality sector also earns facility to operate their businesses globally. The hospitality sector contributes a good amount in the economic development of the nation. Moreover, this particular sector has ranked fifth in the country (Hollensen 2015).     

The economic condition of the entire world is healthy and its growth rate is also increasing. Thus, the value of everything as well as the minimum wage rate of the labor also increased. Thus, it can be said that the well economic condition of the countries have resulted into loss of the firms (especially the hospitality sector) as the production cost of the organizations have increased (Babin and Zikmund 2015).  

The changing life style of the people and the social circles along with it the living standards of the people across the world has brought a change globally with respect to the culture and society. With the increase in the living costs, the people intend to lead their lives at lower cost as the money value increases. These changes in the society and lifestyle have found to affect the hospitality sector globally. The behavior of the customers regarding the hospitality sector depends on certain factors and these include security, various room rates, easy accessibility, preferences towards branded products, responsiveness towards demands of the customers, quality standards and many more (Sheth and Sisodia 2015). It has been found that most of the firms look after all these factors, thus, the social factors have positively influenced the firms globally. Moreover, the hotels mainly highlight the satisfaction level of the customers in order to earn more clients.       

This particular aspect directly affects the operations of any business. Generally, the hospitality sector does not require any modernized technologies for operating the business. Here, the business operation of the hospitality sector mainly put emphasis on the hotel budget for linking the electrical appliances availability and IT services directly (Lusch and Vargo 2014). Moreover, the usage of latest development in the department of IT assists in maintaining a smooth function for the chains of hotels across the world. Furthermore, this aids in developing the centralized system of supply chain management of the hotels. Additionally, the modern technology helps the worldwide hotels in advertising, in launching awareness campaign, in influencing the marketing and promotional strategies.   

The minimum rate of wage of the nations has increased to 15.5 % on an averageas per the rules, regulations and policies of the governments (De Mooij 2013). This occurred as per the Low Pay Commission Report of National Minimum Wage for the year 2009 (Shank and Lyberger 2014). This result into hike in the operating costs of the organizations of the particular sector. Therefore, the production cost of the organizations will also increase and this will put obstacle in the policy regarding offering competitive prices to the clients.     

The social responsibility and the care for environment are regarded as the center stage for the expectations and the preferences of the clients. Presently, people has become vigilant and favors those firms that cares regarding the environment and provide due diligence for adopting the operations of the business. This assists to decrease the pollution and waste disposals. It has been found that the core competencies of most of the hotels are the strong emphasis of the organization on the CSR activities (Corporate Social Responsibility). Generally, the CSR strategy of the hospitality sector includes reduction in the usage of non-renewable energy and waste products. Moreover, the sector intends to decrease its total water consumption. The CSR activities of the hospitality sector include mainly six areas these are – sourcing, customers, community, health, people and environment (Czinkota and Ronkainen 2013).      

Micro Analysis (Porter’s Five Forces) 

The Porter’s five forces help the firms of the hospitality sector in making decision as this is considered as a significant tool that helps in understanding both the external and internal factors that affects the operations of a firm. Porter’s Five Forces model includes:

Threat of new entrants is a major factor. The hospitality sector is continuously growing across the world as the government of the nations encourages the industry. As, this particular industry has found to help in enriching the economic condition of the nations to large extent (Hartley and Claycomb 2013). Therefore, the main threat of the hospitality industry is the entry of other substitute industry in the target market. The reason for this is that this might reduce the target customers of the particular hospitality industry that will lead to reduction in the revenue generation.  

Nowadays, various substitutes of hotels have come into function like relatively smaller guest houses, rented rooms or houses at lower cost, holiday homes and home stays (McKenzie-Mohr 2013). All these provide rooms at lower price to its customers, thus, these attract the customers more than the expensive hotel rooms.

In certain cases, the customers have certain bargaining power. Across the world, it has been found that with the expansion of the hospitality sector, the numbers of hotels have increased to large extent. Thus, the customers obtain more facilities and more options. Therefore, high price of the hotel rooms might compel the hospitality industry to make loss, as customers will look for quality service but at lower price (Armstrong et al. 2014). Thus, the rates of the hotel rooms depend on the bargaining power of the customers.  

Bargaining power of the Suppliers is an important factor in deciding the competitive advantage of the companies. As the numbers of hotels are more, the numbers of suppliers of the products are also more. Thus, the hotels gain the competitive advantage over the suppliers and purchase the raw materials from those suppliers who provide quality materials and also at lower cost.

Intensity of the Competitive Rivalry is a crucial factor in Porter’s Five Forces Model. The sectors on which the economy of most of the countries are dependent, among them, the hospitality sector is one of them. It has been found that nowadays, the travel and tourism sector has become an important rising sector, so the need for growth of hospitality sector has also been increased. Therefore, the government of most of the nations encourage in growing the numbers of hotels in the country (Papadopoulos and Heslop 2014).

Internal Analysis – Value Chain Based on Goring Hotel 

The company’s internal factors or aspects can be better explained through Porter’s Value Chain Analysis. The value chain analysis is mainly comprised of two types of activities – primary activities and support activities. The primary activities of the value chain analysis are inbound logistics, operations, service, marketing and sales and outbound logistics. Based on the present condition of the firm, it can be said that all the primary activities of the firm Goring Hotel are in a better position. The reason behind this is that the operational activities of the particular organization has resulted the firm to become globalized. Moreover, the unique marketing strategy of the particular organization that is Goring Hotel helps it to promote its products as well as services across the nation. Furthermore, this helps in building brand image and this in turn assists to make loyal customers. In addition to these, the outbound and inbound logistics as well as quality service at lower rate attracts more customers towards the firm. Thus, the company operating successfully in the market of U.K. and earns a good amount of revenue (Boone and Kurtz 2013). Moreover, the corporation Goring Hotel incorporates all kinds of popular marketing strategies like increasing the brand value, retention of the brand loyalty and brand loyal customers. In addition to this, the sales force helps in increasing the total sales revenue of the firm Goring Hotel. However, it has been found that the support activities of the organization Goring Hotel are well infrastructure.

The particular organization is well known for its luxury rooms and is better known as luxury hotel in the market of U.K. Therefore, it is an obvious matter that the firm infrastructure is well equipped. In addition to this, the human resource managers should train properly to its employees, as this will help the firm to run successfully and effectively. Moreover, it can be said that the HR manager of the firm should employ experienced, knowledgeable and skilled employees for the betterment of the organization. The hospitality industry is not much involved with the technology development. Thus, the technology department of Goring Hotel is not well equipped or structured. Lastly, procurement of the corporation is also well developed. Therefore, it can be said that the management of the firm should put more emphasis on the technology development and human resource development department.      

SWOT Analysis 

The SWOT analysis of the firm Goring Hotel implies all its opportunities, threats, strengths and weaknesses.

The particular company that is Goring Hotel was established in the year 1910. Thus, it can be said that this specified luxury hotel is considered as an existing brand. The existing brand gains popularity becomes famous with the passage of time, thus the brand image of the hotel of being luxury acts as one of the strengths of the organization. In addition to this, with the passage of time, the existing customer base of Goring Hotel also increases and this also acts as strength of the firm. Moreover, the existing channels of distribution are also considered as strength for the firm as the company is experienced about the channels through which services can be provided more but at lower cost (Baker 2014).  

On the other hand, the perception regarding the company brand and intermediary usage are the main weaknesses of the corporation Goring Hotel. In addition to these, it has been noted that Goring Hotel has poor management system, thus poor skills of the employees and the lack of technological expertise of the staffs are overlooked. Moreover, it can be said that the staffs of Goring Hotel have poor web experience. Thus, it can be said that the particular firm is lagging behind from the perspective of technology, various skills and cross-channel support.  

Goring Hotel possesses the opportunity to cross sell, can expand and operate its business across the world through new markets. Moreover, the particular firm provides new services to its customers thus it helps in attracting more customers. In addition to these, if Goring Hotel make alliances with other brands or starts co-branding, then this will also consider as an opportunity for the particular firm to expand its business.  

The main threat is the change in the customers’ choice as with the changes in the consumers’ perspective needs and demands, the value of the products or services provided by the firm will also decrease. Thus, the customer base might decrease. Recently, the hospitality industry is growing, so numbers of hotels also increase (Babin and Zikmund 2015). Therefore, there is a threat of new entrants to the market and new competitive products might also act as threat for the firm. The conflict might rise due to channel. In addition, social network also acts as threat for the particular firm.   

12Cs Framework of Hotel Industry 

The overall performance of the hotel industry can be better understood from the following analysis of the 12Cs Framework.

Country is the first factor in 12C Framework. Generally, the marketer get familiar along with the nation where he aims to sell his services or products. Therefore, the business person should know all the policies of the particular nation and should spread among the business customs, business and marketing infrastructure of the nation, business laws and import.

Culture is an important factor in 12C framework. The marketer puts emphasis on the culture of the people that are expressed through language, values, behavior, technology and many more as these help the hotel industry to expand its business by understanding the target market.

The hotel industry looks at geographical deliberation of the people in the target market as this helps in understanding the income group, age distribution, population density and many more (Kotler et al. 2015). Based on this analysis, hotels are generally constructed in a region.

Communication needs to be effective for the development of the businesses. Various media of communication helps in promoting the services of the hotel industry.

Channels of distribution need to be developed for every organization. The hotel industry will grow with the help of both indirect and direct channel of marketing. Thus, the firm should adopt various distribution strategies.

Capacity of the hotels are connected with the earned revenue. The hotel industry should put focus on the capacity of the clients as based on the economic condition of the customers the hotels should be constructed.

Currency is a crucial economic aspect for the business organizations. The currency of the nation where the hotel should be constructed should possess exchange rate and thus, it should be convertible.

Control and Coordination are the important factor for business development. The international businessman of hospitality sector should exercise control over the activities of international marketing.

The business person should keep his commitment regarding constructing quality hotel and regarding providing quality service to the customers (Ryan 2016).       

Choice is an important aspect in marketing mix. The business personnel of hotel industry should consider all the factors of marketing mix during the market entry.

Contractual obligations need to be maintained in every business. Before selecting any nation for expanding the hotel industry internationally, the business person should get familiar with all the contractual agreements of the particular country.

Lastly, the businessman of hospitality sector should keep in mind about the local risks of the business, economic trends of the particular nation, its political stability and many other aspects (Christopher, Payne and Ballantyne 2013).  

Summary of Key Issues 

Based on the above analysis, it can be said that the key issues regarding the expansion of the hotel industry internationally are the exchange rate of the currency of the particular nation, consumer behavior of the target customers and the economical status of the clients. All these are the major factors on which the enrichment of the hotel industry depends.   

Strategic Recommendations

Segmentation 

The business personnel of hospitality industry should select the process of segmentation and should divide the business market or the broad customers into sub-groups based on their income level, profession and age (Turnbull and Valla 2013).

Targeting 

In order to achieve more target customers, targeting marketing is an important factor. Therefore, the aim of the hospitality sector is to make the high and middle income level people who are involved professionally and belong to young and middle age group to be the target market of the particular firm. This targeting process will help the particular business to focus on a specific target market and to generate more revenue.

Positioning 

The hotel sector provides luxurious rooms to its clients for bringing change in peoples’ monotonous life. Moreover, the scenic beauty of the particular region and the quality service of the hotel will be the unique feature that will help the industry to achieve a good position in the competitive market.  

Therefore, based on the above analysis, strategic recommendations can be provided that include – firstly, the particular firm should employ skilled and knowledgeable staffs who are much experienced in the particular sector. This would help to run the business effectively and smoothly. Secondly, the management of the organization Goring Hotel should employ some employees of the particular overseas country where the firm intends to expand its business. Finally, the firm should implement proper segmentation method for identifying target market and customer. Moreover, more focus should be put on the targeting and positioning of the firm for better running of the organziation.        

Market Selection and Market Entry

Market Selection by Using 12C Framework

For the particular company Goring Hotel, two countries have been selected for expanding the business internationally. These countries are India and Nigeria. However, among the two countries, Goring Hotel intends to expand its business in one of them. The most suitable county can be better selected based on the analysis of the 12 Cs Frameworks. This comparison and analysis are as follows:

Market Entry 

The particular company should enter the market through penetration marketing strategy and along with it promotional campaign should be performed. The emergence of the new product or services to the new market will help the firm to attain its target market as well as customers successfully.

Marketing Mix 

The marketing mix involve –

Price – The penetration pricing strategy will be implemented in the new market that is in India, as it will assist the hotel sector to enter the newer market (Huang and Sarigöllü 2014). It can be said that this “Price” need adaptation for India.

Promotion – The particular firm will be able to incorporate all kinds of cost efficient ways for promoting the services. It can be said that this “Promotion” need adaptation for India.

Place – India’s urban market will be the correct place for the expansion of the business. It can be said that this “Place” need adaptation for India.

Product – The major services of the organization include providing quality service to the customers.

People – The particular company can employ the people of India for running the hotel in the particular nation i.e. India. This will provide additional value and opportunity to the organization for running its business successfully. It can be said that this “People” need adaptation for India.    

Process – The firm will select an urban area that is highly populated and is developed for travel and tourism. This will help to gather more customers and if the employees of the particular firm are Indian then it will be easier for the organization to promote its services and products within the nation. It can be said that this “Process” need adaptation for India.

Physical Evidence – As the hospitality sector is a service industry, physical evidence will play a vital role as the service has been delivered to the customers has to be shown. This can be shown in the company website with the help of the video clips of satisfied customers who stayed and availed the services of the particular hotel.   

Evaluation and Risk Factors

Therefore, it can be evaluated that though there are various facilities in expanding the particular hotel business in India, there are certain risk factors. These includes – the movement of the exchange rate of the Indian currency, economic condition of the nation and changes in the customers’ demands.

Conclusion and Recommendation

Therefore, it can be concluded that Goring Hotel would run successfully in an international market due to its brand name, popularity, brand image and huge existing customer base. Depending on detailed analysis of the 12 Cs frameworks, it can be said that India is a more suitable market place, where the expansion of the business can take place easily. However, it can be recommended that the marketer should also focus on the risk factors before putting final decision regarding the market expansion.

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