Pan Pacific Kuala Lumpur Airport Hotel Business Strategy
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5.0 Key Factors for Success
Key factors for success (KFS) are the critical factors or activities required for ensuring the success of a business. They need to be identified so that an organization can ensure that they can delivers value that meets and exceeds the expectations of its targeted customers better than competitors (Bowie and Buttle, 2007).
Two key factors for success have been identified for PPKLIA hotel. The hotel physical's condition and hotel website.
PPKLIA established 11 years ago, the exterior of the hotel building now seems aged and the exterior image of the hotel is in old condition with an unattractive design. At first sight, it does not bring an impression of the hotel being a 5-star luxury hotel. This can be considered as one of their weaknesses since there is often an intuitive feeling that effective design can attract customers from the desired target market segment and enable the hotel to price accordingly while operating the unit in an efficient way with the result of this greater market awareness and customer volume is increased profits (Ransley and Ingram, 2001). Hence, PPKLIA should have a refurbishment plan to upgrade the hotel's design in order to achieve what had stated by Ransley and Ingram.
The hotel web site is another factor which is considered critical to the hotel. To hospitality practitioners, the internet offers a means for them to sell their products to global customers without any geographical or time constraints (Huizingh, 2000). The driving force for hospitality suppliers to establish their web sites includes lower distribution costs and thus higher profits, and a larger potential market. Similarly, consumers can search for their needed information and directly communicate with suppliers at any time and in any place (Waller, 2003). Thus, the web site is an important medium for the hotel to communicate with their markets.
6.0 Mission Statement
Organizations develop corporate mission statement in order to share them with their managers, employees and in many cases, customers and other publics (Kotler et al., 2006). According to Pearce and Robinson (1991), mission statement can be defined as broad statement of characteristics (product and market), goals (profit and growth) and philosophies of a business or simply its purpose and philosophies (Byars, 1984). Mission statement below is based on current situation and potential development of PPKLIA.
Pan Pacific Kuala Lumpur International Airport Hotel will be regarded as the paramount leader of airport hotel in Asia exemplifying service of unmatched sincerity and professionalism.
Pan Pacific Kuala Lumpur International Airport Hotel will be the best choice in serving the honorable business and leisure travelers according their different needs and wants. At here, we will treat all of our guests as our priority through the delivering of caring and efficient hospitality to create a truly unique signature service where every signature service comprises of our commitment and responsibility on the service provided.
Our dedicated employees will go through a series of developing and training in an effort to mould them to become an extraordinary individual in providing a unique sense of professionalism to the guests. We will ensure that every employee is treated fairly with dignity where constantly support and caring from leaders to continuously improve productivity and customer satisfaction.
As our hotel surrounded by an oasis of greenery in fusion with luxury, we committed to environmental protection and stewardship by mitigate the impacts on the environment with all the stakeholders to promote and implement responsible environmental practices and continuous improvements.
We will ensure our products and services will remain in the high quality to provide satisfaction to the current and future potential customers and at the same time to breakthrough the limitation in creating competitive advantage vis-à-vis competitors by actively expanding our presence globally, with potential developments in a number of domestic and international markets.
7.0 Strategy Formulation
The task of analyzing the organization's external and internal environments and then selecting appropriate strategies constitutes strategy formulation. It is a process of taking actions consistent with the selected strategies of the organization (Hill and Jones, 2006).
7.1 Prioritize Existing and New Target Market
PPKLIA's current target market composed of business travelers, airline crews, tourists and transit passenger, while 80 per cent of the hotel guests are foreigners with the largest group coming from the United Kingdom and Australia.
According to Bowie and Buttle (2007), business travelers tend to be less price-sensitive, since employer generally meets hospitality and travel expenses. This has made them have more budgets to spend in the hotel. Also, they are less concern on seasonal aspects because business travelers contain business trips that are unavoidable due to their job nature. Moreover, with the recent economic downturn, many companies revised their travel spending, with companies arranging meeting near the airport in order for delegates to fly in and out on the same day (Boston Business School, 2009). This causes business travelers as frequent, or regular, users of airport hotel accommodation. Therefore, a 50 percent of target market allocation for business travelers should firstly being prioritized.
Besides, a 35 percent of target market will be allocate for transit air travelers as the second group to be prioritized since PPKLIA is the preferred choice for transit air travelers with a few long hour in-between flights. Due to the nature of location of the hotel, it provides convenience to this target market to check-out the hotel and able to catch their flight by just going through a 5-minute walking distance of sky bridge that connecting the hotel and airport. Moreover, these transit passengers are mostly come from the Europe countries where they have high spending power. Thus, it should not be overlooked.
Airline crew is the third priority target market group with a 15 percent of target market allocation for it since PPKLIA is an airport hotel, the high volume of intercontinental, regional and international flights, coupled with the need for airline crew to have proper rest periods between flights, has created a demand for group accommodation for hotels within approximately 15 - 45 minutes travel time of major airports (Bowie and Buttle, 2007). While the distance between KLIA and PPKLIA is only a 5-minute walk make it as the preferred choice of hotel for airline crew to stay in.
A prediction from World Tourism Organization (WTO) on China, it expected to send 100 million visitors to other countries (Zhang et al., 2000). Thus, a 60 percent of market allocation should falls under it as first future potential target market to be prioritized. On the other hand, with the popularize by the Tourism Minister Datuk Seri Dr. Ng Yen Yen, the Japan market would permeate into Malaysia gradually by selling product-service that suit the different target market such as sophisticated office ladies and men, students and pensioners. Therefore, this market would have a 40 percent of market allocation being ranked as the second market to be prioritized. Hence, PPKLIA should grab this opportunity to adjust its' products and services to prioritize these markets by cater the needs and wants for the Chinese and Japanese in an effort to enlarge its target market for the business.
7.2 Positioning Statement
The concept of positioning statement in a marketing strategy calls for the creation of an image - the consumer's perception of the subjective attributes of the property vis-à-vis those of the competition. This perception may be radically different from the property's physical characteristics and the distinction between the perception and the reality is especially important for hotel marketers (Lewis, 1981).
Based on the previous internal and external analysis, a repositioning should be carried out in order to revise the marketing strategy for PPKLIA as to increase sales. As a result, a new positioning map (Please refer to Appendix I) has been developed that emphasized on offering the same quality product-service to the guests but with lower price. From the previous positioning map, PPKLIA being plotted at the highest position for the two variables since it has the most expensive room rate compared to its competitors and is the nearest to the subject location, KLIA. As in the new positioning map, PPKLIA is being proposed to lower its ranking from five to four for the price variable. In other words, PPKLIA is encouraged to lower its room rate to the range of RM 375.00 - RM 450.00 in order not to have a big difference with its primary competitors while at the same time maintain its quality.
Below is an overall positioning statement follow along with statements for various targeted segment of PPKLIA.
Pan Pacific Kuala Lumpur International Airport Hotel is a five-star airport hotel recognized by prestige awards and accolades based on the high quality product-service offered. At here, we have world-class luxury rooms and suites which are designed to exceptional standards with an intrinsic eye to detail with sumptuous food and beverage outlets serving an extensive variety of exotic cuisine. Meanwhile, a complete facilities and services are offered as well. We also provide a broad array of meeting and banquet services for business travelers and corporate group. Our hotel is surrounded by an oasis of greenery in fusion with luxury themed hotel to boast a relaxation during guests' accommodation. All employees are treated as the hotel's associates where associate implies partnership and working together and thus they would bring out the best in serving the external customers - our guests.
- Business Travelers: "As one of the finest and most conveniently located hotels in Kuala Lumpur, Pan Pacific Kuala Lumpur International Airport Hotel is the preferred hotel for business travelers and corporate groups to conduct meetings and functions in our conference venues that offer enormous flexibility from a magnificent ballroom to our state-of-the-art auditoriums. Also, we provide a home away from home and an office away from the office with a complete set of secretarial services at the Business Centre to serve the needs of productive business travelers."
- Airline Crew: "In Pan Pacific Kuala Lumpur International Airport Hotel, the hotel's lush tropical landscape, water features and soothing environment make for a rejuvenating break in combating jet lagged and weary airline crew that becoming a limiting factor in aircraft operations."
- Transit Passengers: "We are a full-service airport hotel conveniently located adjacent to the Kuala Lumpur International Airport with immediate access to the hotel via a sky bridge. It is the preferred hotel choice for transit air travelers with a few long hours in-between flights. Air travelers with early morning departures or late night arrivals will find the hotel perfectly suited to their unique needs."
7.3 Gap Analysis & Ansoff Matrix
Gap analysis is the art and science of computing the size of the gap between the sales objectives, and where a forecast based on the SWOT analysis of sales in the future on the identified threats and opportunities that impact on the business (Bowie and Buttle, 2007). It is an analytical tool to be used in conjunction with the Ansoff matrix which is the four alternative strategies to help determine how far each type of action will bridge the gap between initial forecasts for growth and the corporate objective for growth.
PPKLIA can be considered as a business with growth-oriented that are more likely to set ambitious stretch targets that want to see the value of their investment increase. If achieved, there will be an improvement on the market value or capitalization of the business. As a result, a gap analysis and ansoff matrix (Please refer to appendix J and K) has been developed for PPKLIA to forecast the future sales that can be achieved in three years time.
PPKLIA may starts improving its sales by adopting the lowest-risk growth strategy, market penetration. It is a strategy to improve sales by using the existing products in existing markets and this could increase the current customers' rate of use or attracting competitors' customers (Hsu and Powers, 2002). In order to do that, a plan in increasing the rooms sales of 5 percent has been suggested through the increase of frequency. Besides that, it is advisable to encourage spend from existing customers by creating more different loyalty program for different target market since PPKLIA only offers loyalty program to secretary and left out the others. Meanwhile, a frequent stay program will be offered after the creating of loyalty program where points will be awarded to guests based on their frequent of stay in the hotel. On the other hand, the hotel staffs especially from front office (front desk, operator, and concierge) should be trained on their up selling skills in order to sell the most profitable product to the guest to achieve maximum revenue for the hotel while ensuring total customer satisfactions. Besides, advertising and direct mail campaigns will be carried out to target at the ex-customers too. All these activities can help to boost a 5 percent of sales increase to rooms department and may bring the current hotel revenue of RM 61,709,000 to RM 78,843,093 in the future of three years time.
The next strategy to be implemented is the market extension. It features the roll out of existing product-service offers in new markets (Bowie and Buttle, 2007). According to Hsu and Powers (2002), it has greater risk than market penetration because the hotel may lose its market development expenditures if the effort fails. The most common market development activity is to identify new geographic markets. From the previously conducted SWOT analysis, Chinese and Japanese target markets have been identified as the potential target markets for PPKLIA in the future and a succession of marketing communication will be carried out to capture this market. By targeting 3 percent of China and 2 percent of Japan market can help in increasing 5 percent of room sales and contribute an overall sale of RM 82,726,908.
Another Ansoff strategy where it emphasized on developing new products in a hotel to increase customer satisfaction by improving the product offered. They are usually improvements and product modifications, rather than radical new product-service concepts (Bowie and Buttle, 2007). However, it is somewhat riskier than market penetration because of the costs involved (Hsu and Powers, 2002). According to Mr. Alex Chin, the director of sales of PPKLIA hotel year 2009, there is a rules of thumb where refurbishment will be carried out on the food and beverage outlets every five years and ten years for rooms because what hospitality operations offer is an experience and the physical setting is a representation of the experience offered (Hsu and Powers, 2002). The refurbishment can enhance the quality of products and hence create novelty to the existing markets. Besides, infusion of new technology into the hotel also consider as one of the tactics in enhancing the products and services offered. Technology features to be introduced such as the energy management on controlling rooms' air-conditioner and lighting operation where the central computer determines occupancy status and adjusts energy consumption accordingly. Based on the previous internal analysis, the spa service provided in PPKLIA has the high potential to become one of the income generators to the hotel. However, it is not well managed and fully developed. Hence, enlarge its services and products by offering more variety of packages to choose from would attract more guests who emphasize on healthy living. The product development would help in increasing 3 percent of the rooms and spa sales that worth RM 3,205,787 and lead to a future total sales of RM 85,932,695 in the year 2011.
When new products are introduced in new markets, diversification occurs. The diversification strategy focuses on creating new product-service offers for new target markets. This is the riskiest growth strategy, since the company has no existing customer or product knowledge to exploit (Bowie and Buttle, 2007). The tactic suggested to PPKLIA is to open a new themed restaurant to cater the Chinese and Japanese target market. The themed restaurant may offer Chinese and or Japanese cuisine since PPKLIA does not have these cuisines served on the current food and beverage outlets. If the plan succeeds, it would increase 7 percent of room sales and food & beverage sales that contributes to an overall total sale of RM 90,252,325. According to the gap analysis graph, there is still gap between the diversification strategies and corporate sales objectives with an amount of RM 3,329,351. This is due to the corporate sales objectives being set in an ambitious manner and may need further revise.
7.4 Marketing Mix Objectives
Marketing mix decisions is made from the marketing strategies and marketing tactics in order to achieve agreed marketing objectives. Marketing mixes for both the strategies and tactics to ensure that the organization wins sales from the targeted customers against the identified competitors (Bowie and Buttle, 2007).
According to Bowie and Buttle (2007), objectives should be Specific, Measureable, Achievable, Realistic, and carried out within a set Timetable (SMART). SMART objectives provide an operational target that measure the performance of the business and act as a control mechanism in determining whether management is effective.
Below are the SMART objectives set for PPKLIA to be achieved in the next three years.
- Annual / monthly sales Objectives:
- To increase sales from RM 61,709,000 in the current year (2008) to RM 93,581,676 in three years time.
- To target Chinese and Japanese leisure market, and achieve 10% of the overall customer mix of the hotel in three years.
- To purchase five busses in three years time to enhance the accessibility between the hotel and Kuala Lumpur city centre.
- To reduce 20 percent of the energy consumption from guestrooms annually.
- To increase 10 percent food and beverage sales in three years time by establishing new themed food and beverage outlet
- To increase 30 different variety spa product-service within three years
- To set the current room rate 25 percent lower to have similar price with its competitors within a year
- To offer 30 different variety of packages within three years
- To setup discriminatory pricing for transit air travelers can fences based on the two types of length of time staying in the hotel with two types of prices within a year.
- To increase bookings generated through mobile device by 10 percent in a year.
- To increase bookings generated through the website by 25 percent in the next 12 months
- To increase five percent room sales through e-mail marketing within three years.
- To increase awareness amongst Chinese and Japanese market by allocates RM 1 million of advertising fees for three years time
- To conduct stimulation training for new entrants once being employed and interpersonal customer service training for existing employee every six months.
- To form empowerment culture within three years time.
8.0 Marketing Mix Strategies
All marketing decisions to accomplish the firm's grand strategies and annual objectives can be expressed in terms of the marketing mix variables of location, product-service offer, price, distribution, marketing communications, and people. Marketing mix strategies are plans of action to show how the marketing mix variables will be used to achieve the marketing mix objectives and grand strategies (Reich, 1997).
8.1 Location Strategy
According Powers (1990), there are three most important factors to consider when opening a hotel, "location, location, and location". Without a good or excellent location the business's chances of success are greatly reduced.
PPKLIA sited on 2.25 hectares of land at Sepang which is a town and district located in the southern part of the state of Selangor in Malaysia. Formerly a sleepy town, Sepang has grown by leaps and bounds due to several recent developments such as the Sepang International Circuit and Sepang Goldcoast. However, it still lack of tourist spots that would offer sightseeing or entertainments. Transit passengers, who prefer not to rest in the room during the few long hours in-between flights, would suggest to pay a visit to Kuala Lumpur (KL). As the capital of Malaysia, it is the most modern and developed city in the country, with contemporary high-rises and world-class hotels, glitzy shopping malls, and international cuisine. It would definitely provide an ultimate guests' satisfaction in the aspects of entertainments. Also, places such as Putra World Trade Centre, Kuala Lumpur Convention Centre and so on are where most of the business travelers would have their meetings, conference, or trade show conducted.
However, guests who want to access to KL from PPKLIA may feel inconvenience since the hotel located 58 kilometers away from KL and it needs 50 minutes of car driving time to reach there. Even though there is a rail service by Express Rail Link (ERL) which is a standard gauge and electrified airport rail link in Malaysia that connects the KLIA with the Kuala Lumpur Sentral (KL Sentral) transportation hub. Nevertheless, the service is costly for guests who need often access to KL from PPKLIA with a one way ticket that cost RM 35.00 for an adult and RM 15.00 for a child.
In order to enhance the accessibility to KL, a strategy on setting up a free shuttle bus service for in-house guests will be proposed. Firstly, for the first year of this proposing, two busses will purchase and performance measurement will be implemented in order to know whether the outcome of this strategy brings an increase on sales to the hotel, then only to proceed to the original proposed plan to purchase three more busses. This is because the purchasing of a bus is costly, thus, if it does not bring a good outcome, a new strategy may need to develop.
There are two routes to be offer in this service where the first route will have a linkage between the hotel and the Nilai commuter station. Although there are buses at the airport's bus station are offering the same service, however, the buses will stop at every bus station to pick up passengers and it would spend about 45 minutes to reach Nilai commuter station whereas the free shuttle bus service will offer direct route for the in-house guests to the commuter station with just 15 minutes with the frequency of every 15 minutes. Another route will link from the hotel to the KL city centre with the frequency of every hour. The service will only operate from 9 a.m. till 9 p.m. for both routes.
8.2 New Product Development Strategy
Kotler et al (2004) define new product as a good, service or idea that is perceived by some potential customers as new. Most new product developments in hospitality operations are evolutionary rather than revolutionary (Bowie and Buttle, 2007).
8.1.1 Guests Rooms
Since PPKLIA is an airport hotel that linked with KLIA, we would propose that the concept of the hotel should match with the KLIA. According to Sharp (1999), KLIA represents a fusion between nature and high technology with the concept of symbiosis, which Kisho Kurokawa, the designer of KLIA has described as an airport in the forest which is the world's first environmentally friendly airport. As a result, PPKLIA should blend a unique amalgamation of 'green' (environmental concern) into the hotel since its greenery surrounding provides a vantage point to become a green hotel.
PPKLIA utilizes this transformation as a repositioning tool to differentiate itself from its competitors in order to maintain its leading position in the market.
One of the key features in creating green hotel is to reduce the energy consumption in the hotel. Based on a study by Page and Siminovitch (2000), an estimate roughly of 60 percent of lighting energy usage occurs during 9 am to 4 pm period when rooms are generally not occupied. Hence, by introducing of key cards systems which include an energy management features that control the lighting operation where the central computer determines occupancy status and adjusts energy consumption accordingly. It keeps the room constant at a minimal comfort level until a guest requests a more comfortable temperature. It will also switch off the lightning operation in the room automatically when guests are not present.
According to Mr. Alex Chin, the director of sales of PPKLIA hotel year 2009, the installation of solar film coating at Degree 24-hour Restaurant and Travellers Bar and Grill help to reduce heat from the sun light that penetrate through the large clear windows and glasses. When heat reduced, the energy cost of air-conditioning would be reduced as well. Thus, this same concept would apply in the guest rooms as well to reduce heat and at the same time the furniture and fixtures in the rooms are also protected from ultra violet damage and should last longer and look much better.
To assist in the spectacular metamorphosis of PPKLIA, the transformation program will be conducted in stages so as to minimize disturbance to guests and the properties will remain open throughout the transformation. The new key card system will be installing on the first year of the implementation of the objective for the third to sixth floor; while the remaining floors will proceed in the second year. At the same time of installing the new key card system, the solar coating firm will be installing as well.
8.1.2 Food and beverage outlets
One critical attribute of successful hotel food and beverage outlets is their ability to appropriately respond to the changing needs of the market while maintaining a profitable operation (Siguaw and Enz, 2007).
Thus, the key concerns on product development for PPKLIA's food and beverage outlets will focus on establishing a new themed restaurant. The purpose of having this new restaurant is to serve the needs of the future potential market from China and Japan.
Although both of the targeted markets are from different culture and having distinct dietary habit, however, this strategy proposed on the concept similar to the Four Seasons Hotel in Canada that using only one food and beverage outlet with two dining rooms to provide the fusion of Chinese and Japanese cuisine. By having a single food and beverage outlet, the hotel can offer two dining rooms that differ in design, but it shares the same menu, chefs, line cooks, and kitchens. Compared to having multiple outlets, this approach allows the service staff members to provide greater attention to food quality and presentation, to focus on small details, and to deliver higher service levels via a small, highly qualified staff.
The new themed food and beverage outlet will build at the second floor of the hotel building by using the closed down North Indian restaurant, Ashoka. The renovation for this new restaurant will implement on the third quarter of the year 2010. When the restaurant is ready for operation with an estimation of six months time from the renovation process to the ability of fully operate, the Chinese and Japanese market already been permeating into Malaysia and would helps in increasing the food and beverage sales to the business. The reengineering of menus and recipe will implement by stages where the first stage will starts on the year end of 2009. Performance measurement will carry out monthly for duration of six months; second stage will proceed if the outcomes fulfill the objectives. On the contrary, a new strategy may need to develop.
In the late 1990s, hotel spas started to follow the path of other operating departments and transformed from support facilities to profit centers where it functions as the complements the lodging experience, drives occupancy levels, enhances average daily rate and provides a distinctive marketing advantage (Anderson, 2007).
PPKLIA as a full service airport hotel shouldn't left out the development of its spa service since the demand of spa is increasing where it can create prolonged wellness that integrates and renews body, mind, and spirit.
To fully develop the spa operation in PPKLIA, one should know that spas are no longer solely about frivolous self-indulgence and luxurious pampering. PPKLIA should enhance its product-service by adding in a wide range of choices of spa packages with different characteristics for different guests' needs such as day spas, medical spas, mineral spring spas or club spas. PPKLIA may need to reevaluate and repackage it with a broader emphasis on self-care, stress relief, emotional balancing, and preventative wellness modalities. Since there is a lots of types of spa, PPKLIA may introduce a few spa type for market testing starting on the year 2009 and the testing may go for a year in order to capture the market preferences and then do repositioning on the following year to offer only one or two types of spa that is the best seller on the year 2009.
8.3 Pricing Strategy
Price is a component of the marketing mix and the vehicle used in free enterprise to allocate limited resources. Therefore, organizations should put a great deal of effort into formulating their pricing strategies that integrates marketing and finance in an attempt to create an atmosphere of mutual satisfaction. The product-service attributes are combined with price to provide enough value to satisfy customers, while enabling the organization to cover costs and make adequate profit (Reid and Bonjanic, 2009).
8.3.1 Competitor-Based Pricing
From the above competitor set analysis, it can clearly be seen that PPKLIA has the highest pricing when compared to its three other direct competitors. Therefore, PPKLIA should adopt competition-based pricing approach, which is the establishment of price based largely on those of competitors, with less attention paid to costs or demand. The firm might charge the same, more, or less than its major competitors (Kotler et al., 2006). According to Kotler et al. (2006), firms feel that the going price represents the collective wisdom of the industry concerning the price that will yield a fair return; meanwhile holding to the going price will avoid harmful price wars. PPKLIA may need to lower its room rate 20 to 25 percent with which mean the lowest available room rate should be in the range of RM 375.00 - RM 400.00 considering the pricing of its main competitors is also close to this price range. A 5 percent of the current room rate will slashed for the first year and it can be adjust gradually to a certain level that profitable to the business as well. There is another major reason to cut prices, as Kotler et al. (2006) stated, companies cut prices in a drive to dominate the market in the hope of gaining market share through larger volume. The price cutting of PPKLIA would lead its customer to perceive there is better value being offered in the hotel, thus increasing demand.
8.3.2 Product-Bundling Pricing
The hotel should also implement product-bundle pricing where it combines several of hotel's products and offer the bundle at a reduced price. Price bundling can promote the sales of products consumers might not otherwise buy (Kotler et al., 2006). From the previous analysis, the spa service in the hotel is designated as Dog under the BCG Matrix. This means that the spa service in the hotel is low in demand. Bundling the Spa service with other products in the hotel like room and meal and sell it as a package at a reasonable price would help the spa service to gain demand. A target of thirty packages that includes accommodation, breakfast, buffet lunch meal, and spa service with mix and match method to suit different target market needs and wants the at a competitive price will be offered and introduce to the customers within three years time.
8.3.3 Discriminatory Pricing
This strategy refers to segmentation of the market and pricing differences based on price elasticity characteristics of the segments. In discriminatory pricing, the company sells a product or service at two or more prices, although the difference in price is not based on differences in cost. It maximizes the amount that each customer pays (Kotler et al., 2006).
Transit air travelers tend to be more price elastic since they are not choosing a direct flight which will cost more than changing flights at other country so that they are not required to go through customs or immigration formalities that may lead to have a cheaper flight. This perception would apply on when choosing the accommodation during their few long hours in-between flights too. They would not pay a room with high price just to pass the time during this short period. Normally, they would rather spend more to have a better accommodation when they reach the exact destination.
As a result, PPKLIA may establish different sets of price to fences transit air travelers who have different length of time of in-between flights. For example, transit air travelers who have less than six hours of in-between flight can have a cheaper price without complementary breakfast compare to those have more than six hours in-between flight will need to pay a higher price but with a complementary breakfast. By implementing this strategy, different guests' needs are fulfilled.
8.4 Distribution Strategy
A distribution channel is a set of independent organizations involved in the process of making a product or service available to the consumer or business user (Stern and El-Ansary, 1988). Development of a distribution system starts with the selection of channel members; the selection of appropriate channels of distribution is basic to the development of successful sales strategies. Once members have been selected, the focus shifts to managing the channel (Kotler et al., 2006). The following will discuss on the enhancement of current marketing intermediaries of PPKLIA.
8.4.1 Mobile Technology
A recent survey conducted by EyeforTravel Research (2009) demonstrates the impact Mobile technology will have on the travel distribution landscape in the next 6-12 months with the results explains the challenges and opportunities created by new mobile technologies and the ever increasing used by travel consumers. It was emphasized that the use of mobile in travel distribution in future is unavoidable and it is the "key success of any travel business in the future. According to Google's studies on consumer research and buying habits across the Internet, 25 percent of business travelers are more likely access information about travel sites from their mobile phone (Sullivan, 2009).
For example, this Mobile Travel Technologies has been adopted by Hilton hotel in the UK and Germany. The launch of this innovative mobile service automatically directing customers to a view of the site optimized for their particular device. The site has been developed with a usability focused User Interface, with minimized clicking, typing and scrolling required. A free-text search allows travelers to quickly locate a particular hotel, find directions or check hotel facilities, and the site has 'click to call' capabilities throughout for those users who want to speak to the Hilton call centre (Mobile Travel Technologies, 2009).
With all these supported studies and a real case from one of the hospitality organization, it indicates that this mobile technology is a potential plan to be implemented for PPKLIA. PPKLIA may design a mobile interface website that can load quickly in a mobile phone with web surfing function. Users can access to a range of service and reservations functionality such as room reservation, access and change bookings and view hotel images and information whilst away from their personal computer. In order to implement this strategy, PPKLIA would need to have its own mobile interface website with all the functions mentioned need an approximately a year to develop and may introduce to the public in the year 2010.
The Internet is rapidly becoming an important distribution channel with relatively low costs, allowing the independent operator to gain access to world markets (Kotler et al., 2006). According to Google's studies on consumer research and buying habits across the Internet, in order to find the best deals, consumers will search the Internet for information more often than any other source (Sullivan, 2009).
Hence, PPKLIA should focus on improving its website and adding more features in it since it is a central online destination, the web site must provide a wide range of information to satisfy all types of customers who may be at different points in their purchase process. Information such as detailed product descriptions, suggested related products, best seller lists, customer comments and ratings, product support, retail locations, company information, and returns information should be clearly stated as well.
Besides, the hotel may provide restaurant seat reservation function on its website, as it is now lacking of this function. By adding this feature, it is possible to meet the distribution objective of increasing the hotel reservation through website. Customer can easily make reservation of all the three F&B outlets in the hotel.
Since a picture tells a thousand words, PPKLIA should provide more rooms and facilities photographs on its website, so that the customers would know what the hotel looks like, and have a better cognition of the hotel's rooms and facilities before they make reservations. Besides, travel videos have also become important as people plan trips. They help people to visualize the surroundings and make better choices on where to stay and what to do (Sullivan, 2009). PPKLIA may consider creating videos to introduce the hotel and its facilities and services. It allows the potential customers to have a more understanding of the hotel and it would help a customer to make their decision whether to stay in the hotel. This is a channel for the hotel to showcase and display itself to the worldwide potential customers, and this function should not be neglected.
8.5 Marketing Communication Strategy
The endless goal of most marketing communications is to influence demand and generate sales. To influence demand and generate sales successfully, marketing communication needs to raise the target market's awareness of the hospitality brand and help form their expectations of the hospitality experience (Bowie and Buttle, 2007). PPKLIA marketing communication's end goal can be achieved in the following method.
8.5.1 E-mail Marketing
E-mail marketing is a direct marketing where targeted e-mail messages targeted e-mail messages based on past behavior enable marketers to create more personal, relevant communications and this should result in higher revenues. Better-targeted communications can break through clutter and help marketers enhance their relationships with customers (Cohen, 2007).
PPKLIA might need to send out electronic mails to its ex-customer, the frequent customers and the potential customers as a way to retain the customers by introducing and promoting the current and new products and services offered in the hotel such as packages, special events and so on. Thus, the content of the e-mail is very important to act as a tool to convey the info to its customers and it needs to include the features such as search box to provide convenient when searching for the hotel product-service easily. When customers attempt to buy those products, a "Buy Now!" button should be included for direct access without going through a complicated purchase process. Some users might wish to recommend those products to his or her friends, hence, a forward-to-a-friend functionality can be added in as well. A "Contact Us" link or button can provide an indirect communication between the potential customers and the hotel. A design of the interface for the electronic mail need to use a year to develop based on all the functions mentioned above and may use as a marketing tool to capture the target market starting on the year 2010.
Advertising, as defined by Kotler et al. (2006), is any paid form of non personal presentation and promotion of ideas, goods, or services by an identified sponsor.
From the previous analysis, the Chinese and Japanese markets are regarded as potential markets and have been prioritized; in order to create awareness among these two markets, advertising is the most suitable marketing communication method. Therefore, PPKLIA should implement informative advertising, it is used heavily when introducing a new product category and when the objective is to build primary demand (Kotler et al., 2006).
The hotel should advertise itself and it's product in Chinese and Japanese language respectively, this can create affinity between the hotel and the two target markets. The hotel can have its advertisements placed in KLIA, Chinese/Japanese airline companies, and in the airports that have direct flight to KLIA in China and Japan. PPKLIA can also advertise in the magazines and newspapers that are always available and provided in the Chinese/Japanese airline and airports.
The advertisement will mainly in a form of printing materials such as posters, sales kit, brochure, advertisement in tourism magazine, newspaper and so on. A RM 1 million of advertising fees will be allocate for this strategy whereby RM 30,000 of the fees will be allocate for the first year, the remaining fees will be allocate for the second and third year if only the outcome of this strategy is success, otherwise, a contingency plan may need to implemented.
8.6 People Strategy
'To have satisfied customers, the firm must also have satisfied employees' is the basic premise to be achieved by treating employees as customers (Ahmed and Mohammed, 2002). This could be done by adopting marketing techniques to recruit, communicates and motivate employees, and this approach is called internal marketing (Varey and Lewis, 2000).
PPKLIA might need to have a culture change to instigate a feeling of ownership and liberation among staff. It is everyone's job to provide a service to customers, whether the customers are paying guests or other departments in the hotel (Watson, 1996).
Riley (1996) estimates that 64 percent of the jobs in the hotel, restaurant and catering sector are unskilled or semi-skilled and this lead to the indication of low skills profile of jobs. Most of the hospitality employees do not have any educational background in this industry and usually accumulate experiences through their working life.
As a result, in order to improve the situation stated by Riley, training is the most suitable method to be carried out as it is apparent that training at all levels would bring long-term benefits to the organization. For new entrant, training would be a must for them since we do not want them to practice their skills on the customers. Instead, a stimulation practice would develop in an effort to have them practice in an environment that similar to the real workplace. For example, a waiter trainee can practice taking orders in a training restaurant comprised of other servers, the trainer, and a manager, or provide other service situations they will eventually have to deal with it. Besides, PPKLIA may also set up a front desk check-in simulation to allow trainees to practices registering guests. They can go for the real position when they have mastered the skills or methods and are comfortable with this kind of situations that arise when dealing with customers.
This stimulation forms an environment into a real world that the trainees need to face, but without real customers, thus allowing the trainee to make and correct mistakes that will not harm the business. Stimulation is generally used for practicing and testing rather than initial instruction (Jazzy and Dunk, 2003).
For the existing employees, training should be constantly given in order to maintain and improve their skills level. Training may focus on development based programs such as interpersonal customer service. This program may emphasize on the up selling skills where it helps to achieve maximum revenue for the hotel while ensuring total guest satisfactions. This technique should be trained on employees from front of house such as front office employees and servers by encourage guests to use the best product-service that fit their needs, and enhance their experience during their stay in the hotel.
Empowerment involves responsibility to ensure customers are satisfied with the service encounter. This responsibility needs to be matched with delegated authority and supported by appropriate resource such as technology, training and budgets (Bowie and Buttle, 2007).
As stated in the previous internal analysis, empowerment is not implemented in PPKLIA and the occurrence of problems may affect the business. This can be solving by adopting a succession of training program on empowerment. The employees are encouraged to empathetic towards customers' needs and wants especially they are facing some problems with their rooms, transportation and so on. When employees stand in the customers' point of view, they will have a different understanding and may take different actions compare to just to pass the responsibility to the middle managers.
Employees should learn that guests need to be acknowledged whilst waiting; want to be treated as individuals; want to see employees who they know and who like their job; and, most importantly, do not want 'hassle' when they are staying in a hotel or dining in a restaurant (Bowie and Buttle, 2007).
9.0 Monitoring, Control, and Contingency Planning
The penultimate stage of this strategic marketing planning process is to design a system to monitor and control the plan's implementation (Bowie and Buttle, 2007). The key to control is based on SMART objectives.
Monitoring measurement can be carried out based on quantitative and qualitative data. Dey (1993); Healey and Rawlinson (1994) stated that quantitative data is based on meanings derived from numbers with the collection results in numerical and standardized data and the analysis conducted is through the use of diagrams and statistics; while qualitative data is based on meanings expresses through words with the collection results in non-standardized data that require classification into categories and the analysis conducted is through the use of conceptualization.
The annual / monthly sales objectives can be measures based on sales from each department especially rooms and food & beverage outlets. Both of these departments are the income generator, the sales earned would directly reflect the hotel's business condition.
The customer mix of the hotel business can be measured based on the customer mix ratio. Location objectives will be measure based on the customer feedback from comment card to analyze the customers' point of view on the distance between the hotel and the desire destination to go. The product development objective can be measured based on customer satisfaction index to measure satisfaction of customer where interview to be carried out to ask about their satisfaction with the new product-service they have used and consumed including durable goods, non-durable goods and services.
Pricing objective can be measured based on the volume of room and spa sold. It indicates whether guests are being attracted to the lowered price and different price sets offered. Distribution objectives can be measured based on the number of booking generated and number of hits on the website whereby more hits indicates the website is being visited regularly. Marketing communication objective can be measured based on the strategies that lead to change in brand awareness and brand image. This can be seen from the improvement of hotel sales. People objective can be measured based on evaluation, appraisal, and employees' satisfaction level where the job performance will directly reflects the way employees being treated and it can be analyze through evaluation.
In order to control on these measurements on every objectives, a group of committee can be formed by each head of department to carry out the control process in order to see how is the measurements have been effectively measure the outcome of each objective. The control process may conduct every six months in order to keep the controlling process up to date and to take corrective actions if the outcomes does not reach to a satisfactory level.
Contingency planning recognizes that the key assumptions upon which the marketing plan is formulated may be incorrect, and contingency plans are formulated on 'what if?' scenarios (Bowie and Buttle, 2007).
PPKLIA can collaborate with ERL company to provide cheaper ticket price for in-house guest to enhance accessibility as the contingency plan for the location strategy. Meanwhile, the product development will focus on replacing those old furniture and fixture, and amenities in the guest rooms with brand new design, while a change of concept for current food and beverage outlets will be carry out with the provision of a selection of food and beverage portion to choose from to suit different eater. In the spa operation, it will concentrate on serving medical spa with variety packages.
On the pricing objectives, PPKLIA may need to perform penetration pricing for rooms in order to attract new customers. Spa operations should increase the length of time for the spa service while remaining the prices to create value for money concept. Since transit air traveler only rest in the room while waiting for the few long hours in between flights, they might seldom use the amenities in the room, thus, PPKLIA may provide rooms with lesser features and amenities for them as one of the method of cost control as well. Distribution objectives' contingency plan may aim to have booking through SMS for those users who prefer quick and convenience service. In addition, discount voucher will be given away to those who make online booking to increase the market coverage. Marketing communication's contingency plans includes being involved in corporate social responsibility to create brand awareness through the charity and so on. Also, advertisement will advertise in the Chinese and Japanese tourism website to gain market from these markets. Finally, the people objectives may increase employees' involvement in decision making and could encourage creativity ideas; while a practice on having the General Manager to meet face to face with randomly selected employee every week to understand the current situation of the employee as a way of caring to them (Please refer to Appendix L for the monitoring, control and contingency planning table).
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