Critically evaluate the contribution of strategic marketing to the overall strategic management of organisations and the pursuit of sustainable competitive advantage.

Learning Outcomes Assessed This coursework aims to assess the following learning outcomes: 1. Critically evaluate the contribution of strategic marketing to the overall strategic management of organisations and the pursuit of sustainable competitive advantage. 2. Apply the various strategic marketing frameworks and concepts to the strategic planning process. 3. Exercise considered judgement in assigning priorities and determining objectives in specific organisational situations. 4. Apply diagnostic and creative skills in the marketing planning, implementation and control processes in a variety of different organisational situations including the service sector and not-for-profit organisations. You are asked to develop a Marketing Plan for the Relaxation Hotel. The Marketing Plan should cover a period of three to four years. This should be presented in report format. The marketing audit part of the plan should be concise and insightful. As a guideline it should not exceed 1500 words (excluding headings, references and diagrams, but including any tables that you may choose to use) and should conclude with a SWOT analysis, which should briefly and succinctly summarise the strategically important issues for the Relaxation Hotel. As a guideline, the remaining part of your marketing plan should not exceed 2000 words. You are expected to use material in the case study extensively and also be aware of and take into account: – 1. Relevant information about contemporary events that may affect the company from, for example, the quality newspapers 2. At a very limited level, issues and trends affecting the holiday, hotel and restaurant industries. This should be available from similar sources as (1) above. Note however, that the focus of this assignment is on your interpretation of information – predominantly that in the case study – and not on the information itself. There is plenty of information in the case study and any research outside that should be extremely limited – please do not invest much, if any, time in it! The Relaxation Hotel The Relaxation Hotel is located in Sussex a few miles South of the M25, close to Gatwick Airport. It is a family owned business which was started in 1990 by the Jacobs family and is located in twenty acres of grounds close to the main train line from London to Brighton and within easy striking distance of the cross-channel tunnel and ferries to France. Local attractions include the Chartham Park and Lingfield Park Golf Courses. Alison Jacobs, who had financed the purchase of the hotel from her earnings in the City in the 1980s, had represented England at golf and was the Captain of the Ladies Team at Chartham Park Golf Club. A short distance away, water sports, which tend to appeal to younger and more athletic people, are available at Weirwood Reservoir. Crawley and Felbridge Lawn Tennis clubs are also nearby. In addition, for the more mature visitor, there are several National Trust Properties including Standen and Wakehurst Place. The hotel has been developed over the last twenty years by investing profits in expanding parts of the business. The original hotel consisted of some 60 bedrooms which, whilst of a good standard, would be termed as business or tourist rather than luxury accommodation. Following a boom in international business in the late 1990s the hotel was expanded to accommodate an additional 20 suites, suitable for affluent guests, or potentially families, and a further 20 bedrooms of the same standard as the existing ones, making 100 in all. In addition, a small conference centre (the Relaxation Conference Centre) was added and the hotel continued to concentrate on the business rather than the tourist market, attracting companies from London, particularly those that needed to accommodate conference attendees from overseas, who could use Gatwick Airport. As technology had advanced, however, the conference centre was beginning to look a bit “tired” and it was felt that it was beginning to require a substantial makeover. Other facilities included the Relaxation Bar and Bistro together with the Relaxation Restaurant that could accommodate and cook for some 150 people: all of these had enjoyed good custom from the business guests. In addition, the indoor swimming pool had proved to be an attraction for these guests. The purchase of the hotel attracted some attention in the early 1990s because of Alison’s background and even now its and Alison’s names are widely recognised since Alison continues to have a high profile as a sportswoman and remains involved in a number of national sporting organisations. As a consequence of this, occasionally a guest with an interest in sporting activities of some kind seeks out the hotel. In addition to catering for guests staying at the hotel, the restaurant had also enjoyed considerable custom from the local residents in the surrounding villages, where it Page 7 of 16 303MKT 2014-2015 CORPORATE MARKETING STRATEGY enjoyed a good reputation. The restaurant opened only in the evening, relying on the bistro to cater for the needs of hotel guests at lunchtime. Historically, it has served traditional English food, using high quality ingredients sourced from long-standing suppliers. Because of this, it has been popular with businessmen, although there was some doubt as to whether the overseas visitors to the conferences that stayed at the hotel were as appreciative of the type of food offered. It has always worked to two sittings an evening, starting at six o’clock and nine o’clock. The Hotel was aware that serving times could be important because guests often had to catch trains or planes, but there had been occasional complaints about timings of the service that it had put down to problems with temporary staff. The question of speed and standards of service had also arisen in the Bistro, possibly due to differing customer expectations there, and the family felt that this needed to be addressed. Generally, however, the permanent staff were reliable and enjoyed a good relationship with the guests, often discussing local attractions and activities with them. Following the credit crunch, the level of business guests declined significantly and the hotel suffered from a low occupancy rate in its rooms (See Appendix I). It decided, therefore, to focus more on the tourist and holiday market with a reduced emphasis on business guests. This approach, which had involved a reduction in prices, had proved moderately successful, attracting both UK and overseas visitors. The latter found the proximity to Gatwick, Heathrow and Stansted airports convenient. The Jacobs family now believes, and anecdotal evidence from other hotels in the area confirms, that as the economic climate improved, business guests had been making more use of hotels in the UK generally and particularly those with easy access to London and the airports. They had noticed a particular “bounce” in the number of business guests in 2013, following the London Olympics (see Appendix IV). In addition, both the tourist and leisure markets as a whole picked up and the Jacobs had seen a slight upturn in the room occupancy by these groups. However, as the pound has grown stronger against virtually all the other major currencies, particularly the Euro and the US Dollar (See Appendix II), the family has noticed that overseas visitors are becoming more reluctant to visit the UK, finding it ever more expensive to do so. The family now feels that it is important to invest in the business and possibly change direction in order both to protect its existing level of business from further losses due to adverse exchange rate movements and also to grow it for the future. It feels that following similar strategies to other hotels in the area does not offer sufficient scope for growth and that it has to establish some point or points of differentiation. It has, therefore, invited you, as a Marketing Consultant, to advise on its medium term strategic plan, which the family intend to finance by borrowing from their bank. The bank is only prepared to lend money against one major project, which i
s likely to involve additional investment in marketing as well as, possibly, infrastructure, to grow the business in the short term and has indicated that it will only do so on the strength of a sound business plan and visibly increasing cashflow. However, it has indicated that, if that project is successful, it would consider providing additional finance to support a further project in the medium term. The family is keen, therefore, for you to advise on ways in which it might increase its level of business and so improve its cash flow. Page 8 of 16 303MKT 2014-2015 CORPORATE MARKETING STRATEGY You have gathered some information from Mintel and other sources and this is shown in the Appendices. The family has asked that you do not invest money in further research at this time, indicating that it is perfectly happy to validate any reasonable assumptions that you make before it embarks on implementing the strategy that you recommend. Such assumptions will, of course, be based on your knowledge gained, as an intelligent consumer, from the quality press, TV and Internet News. The UK Hotel Industry The UK Hotel Industry has always charged high prices to the business or corporate sector. However, as can be seen from Appendix 1, this source of income was severely affected by the Economic Downturn. Whilst it has always been competitive, it has been hard to establish any significant differentiation and bookings have often relied on the location of the hotel and availability of rooms. However, some hotels have been successful in building up relationships with businesses by offering a high level of service and reliability and have added value with, for example, shuttle buses to airports and concierge services. In a similar way, some have opted to work with tour operators to offer a complete package including flights, accommodation and holiday activities for holidaymakers. Many of the tour operators target specialist holidays such as honeymoon packages or activity holidays (See Appendix III). More recently, hotels have come to rely on websites such as for additional business, albeit at lower rates than their normal ones. The industry is facing an increased amount of bureaucracy with the ban on smoking in public areas and increasing concerns about binge-drinking. This comes, of course, on top of the existing costs of complying with Health and Safety Legislation. These costs affect profits and make it important to maintain a high level of room occupancy. As the Credit Crunch took hold, budget hotel chains such a Travelodge and Ibis gained in popularity. Whilst they offer little in the way of service other than the most basic of facilities, they do offer the benefit of being cheap. They have seen their level of business maintained as the economy recovered as they have retained the customer bases that they built up in 2009-2010. There is a Travelodge very close to Gatwick Airport. Despite the inroads made by the budget hotels, anecdotal evidence suggests that the Business Market for the non-budget hotel sector, in which the Relaxation Hotel would be classified, grew by some 6% in volume terms between 2011 and 2013. However, it is unlikely to return to the halcyon days of the late 1990s and early 2000s firstly because businesses have become more cost conscious and, secondly, because technology like video-conferencing has reduced, and continues to reduce, the need for travelling for business purposes. The Restaurant Industry in Sussex Following a dip in overall revenue during the economic downturn, the restaurant sector has recovered and the trend continues upwards. Informal research in the local area in Sussex suggest that consumer spending on sit-down meals is Page 9 of 16 303MKT 2014-2015 CORPORATE MARKETING STRATEGY recovering with a market growth rate of some 1.5-2% quarter on quarter since the beginning of 2011. Consumers are increasingly demanding to new styles of food and drink from different parts of the world (e.g. French, Italian, Portuguese, Indian, Japanese, Thai, Malaysian and Middle Eastern) and restaurants serving these styles are continually springing up. Eating out has been a growing part of the lifestyle of young cash-rich, time-poor professionals for some time. However, the affluent “grey market”, born in the 1940s and 1950s and free of mortgage costs and the responsibilities of bringing up its children, has become an increasingly important part of the market in all parts of the Western World, particularly as the disposable income of young professional has been negatively affected by the higher cost of living, including mortgage costs. Other influences have included an increasing awareness of health issues and a consequent trend towards healthy eating. Additionally, an increasing number of pubs in Sussex have come to rely on serving food, mainly traditional dishes, to their local customers. Competitors The competitors for the Hotel can be considered in a number of ways. There are local competitors for both the restaurant and the hotel. The local area provides an extremely wide range of restaurants ranging from Burger Bars through medium priced restaurants offering virtually every style of food, through to restaurants able to offer both a similar and higher standard of food to that offered by the hotel. In addition, further afield in Brighton and London, a vast range of food is available. Whilst the hotel obviously faces competition from Brighton, London and elsewhere, the competition locally is somewhat easier to quantify. A typical competitor would be the Selsdon Park Hotel, some six miles to the North of the M25 and so some thirteen miles from the Relaxation. This is somewhat larger than the Relaxation and boasts its own golf course. Closer to home, hotels such as the Gatwick Hilton provide strong local competition. Important Note: This case study has been compiled from a mixture of factual and fictional sources. The text above has been adapted for the purposes of the case study and may not represent an accurate reflection of the current situation in the hotel industry. However, for the purposes of the assignment and the exam, you should consider that it is accurate. Page 10 of 16 303MKT 2014-2015 CORPORATE MARKETING STRATEGY APPENDIX I – THE EFFECT OF THE ECONOMIC DOWNTURN ON THE UK HOTEL INDUSTRY UK hotel industry feels effects of global economic downturn 26 March 2009: The UK hotel industry did not escape the effects of the global economic downturn in 2008 and another difficult year lies ahead in 2009, although a number of international events and the decline in the value of Sterling may soften the impact, according to Hotel Britain 2009, PKF’s definitive guide to the performance and prospects of the UK hotel industry. The report reviews the performance of 548 hotels representing over 88,000 rooms across both London and the regions. According to Robert Barnard, Hotel Consultancy Services Partner at PKF Accountants & business advisers, UK hotels face a challenging year in 2009 due to the deepening economic downturn. However, exceptional growth in the market over the last five years does give the industry a strong starting point and international events, new concepts and further investments may soften the impact. Robert said, “There is no doubt that there are challenges ahead, but while this 2009 edition of Hotel Britain is the gloomiest yet, there are important positives to remember. “The UK is hosting a number of international sporting events in 2009 such as The Ashes and the ICC World Twenty20 and these may boost UK visitor numbers. “Equally, Sterling has dropped to record lows against the Euro and the US Dollar and this should encourage visitors from both Europe and North America who, in the last few years, have avoided the UK due to the strength of Sterling. “The North American visitor market to the UK may also be buoyed on two fronts by the appointment of new USA President Barack Obama: firstly, because we are no longer in an election year when most Americans tend not to travel; and secondly, by aiding consumer confidence which may encourage people to travel. “Finally, while the luxury sec
tor is slowing, the budget end of the spectrum is still reporting positive results and both Premier Inn and Travelodge have aggressive development plans for 2009.” 2008 Hotel Performance UK hotels saw rooms yield fall from £74.33 in 2007 to £74.10 in 2008. Occupancy was also down – it dropped 2.5% to 73.9% – but in contrast, the Average Achieved Room Rate (AARR) increased by 2.3% to £100.33 across the UK as a whole. In London, AARR increased year on year by 3.8% to £140.56 and this pushed Page 11 of 16 303MKT 2014-2015 CORPORATE MARKETING STRATEGY rooms yield up by 2.0% to £112.74. Occupancy was down by 1.7% to 80.2%. Hotels in the regions reported negative growth with rooms yield down 2.4% on 2007 to £53.55. Occupancy also fell, down 2.9% to 70.5%, but AARR managed a small increase of 0.5% to £75.99. While regional UK overall did not have as strong a year as 2007, there were two cities which bucked this trend: York and Liverpool. Provisional figures indicate that European Capital of Culture in 2008, Liverpool, received a record number of visitors in the year. The city had the highest occupancy growth of the 23 regional cities in 2008, jumping 6.0% year on year to 77.9%. York had an equally impressive year and posted one of the highest occupancy levels in 2008, up 3.2% to 80.8%, higher than London hotel occupancy levels. Hotel Britain 2009 costs £300 via PKF’s website at Source: Page 12 of 16 303MKT 2014-2015 CORPORATE MARKETING STRATEGY UK Hotel Industry Slips Another 3 Percent Sharon Miller March 2010 According to a new survey done by BDRC, a market research agency, the golden age of business travel in the UK is finally over. The company said that the size of the UK domestic hotel market for business travelers fell last year by 3 percent to 56 million “room nights.” The 2010 Hotel Guest Survey showed that business travelers have cut, on average, four nights off their stays compared to the same time last year. This survey also found that just under 50 percent of business travelers say that their companies have asked them to change their behaviors to reduce costs. This, of course, led to a 27 percent cut in the length of stays and a further 22 percent of people staying at cheaper hotels. The survey also found out that companies are now cracking down on travel as a whole. Three out of four companies now operate a hotel policy in order to save money. A quarter of the survey’s respondents say that this new policy is being strictly enforced. The market research agency said that 44 percent of its respondents reported an increase in enforcement in the last 12 months. This was either through limits on room rates, which made up 31 percent, or restrictions of choice hotels, which made up 29 percent. Of course, the survey did find out that 53 percent of travelers still choose their own hotel. The survey also showed that business travelers were becoming increasingly price savvy, with 19 percent using price comparison sites to get the best deal. This is all good news for businesses that have members of their team traveling, but bad news for hotels, as it brings an end to the golden age of business travel. Source: Page 13 of 16 303MKT 2014-2015 CORPORATE MARKETING STRATEGY APPENDIX II – EXCHANGE RATES The current exchange rates of the £ against major currencies at September 2014 are as follows: – €/£ 1.26 euros to the pound sterling $/£ 1.66 US dollars to the pound sterling Economic forecasts are, as often happens, conflicting. However, the consensus appears to be that the US dollar will recover (standing at 1.53 to the pound in February 2015) and that the Euro will continue to decline. FIGURE 15: Sterling exchange rates, 2010-2014 Sept 2011 Sept 2012 Sept 2013 Sept 2014 % change 2011-14 Units/Pound euro € 1.15 1.24 1.18 1.26 9.57 US Dollar $ 1.56 1.62 1.61 1.66 6.41 Australian Dollar 1.53 1.55 1.69 1.77 15.69 Canadian Dollar 1.55 1.58 1.64 1.80 16.13 Thai Bhat 47.8 49.98 49.87 53.09 11.07 South African Rand 12.09 13.37 15.51 17.74 46.73 Indian Rupee 74.79 87.68 99.4 100.43 34.28 UAE Dirham 5.76 5.95 5.90 6.10 5.90 Japanese Yen 119.87 127.18 159.9 173.21 44.50 ● A positive percentage change indicates that the currency is weaker against the £ ● Any strength of the pound (ie a weakness in the overseas country’s currency) is a major issue for inbound tourists particularly as Britain is already considered an expensive place to visit. Page 14 of 16 303MKT 2014-2015 CORPORATE MARKETING STRATEGY APPENDIX III EXTRACTS FROM MINTEL REPORT – ACTIVITY HOLIDAYS – 2010 Report Introduction This report provides an overview of trends in activity holidays, investigating the core market factors, strengths and weaknesses, consumer dynamics, and likely future developments. The recession put a stop to five years of growth in activity holidays, with an estimated 16% fall in activity breaks during 2009. There are signs that activity holidays are no longer just the preserve of young adrenaline junkies, but are becoming more ‘mainstream’, attracting more women, more over-50s and more Market in Brief Upward activity curve flattens • Activity Holidays have been on a strong upwards curve for the past decade, with a series of Mintel surveys showing ‘lifetime’ market penetration of 30% at the end of the 1990s, 35% by the middle of the noughties and 43% at the beginning of 2008. However, during the recession, that growth has reached a plateau. • Overseas Activity Holidays grew by an estimated 22% between 2004 and 2008, but fell by 16% in 2009. ‘Once in a lifetime’ special adventures and second/third tier breaks have been particularly hit. However, many operators report recovering sales in early 2010 and expect this trend to continue. • The domestic activity market grew by an estimated 11% from 2004-09 with growth continuing in the recession. Adventure operators have introduced more UK-based products over the past 12 months, and one leading cycling specialist reports domestic growth of 30%. …to Activity Holidays Taken – Activity penetration reaches plateau Star trekkers • Activity Holidays currently account for around 12% of the overall travel market in terms of volume. The total Activity Holidays market was worth an estimated £4.7 billion in 2009 (excluding overseas transport). • Walking/trekking is the most popular form of Activity Holidays, accounting for almost four in ten activity trips. This has been the fastest growing activity type over the past two years and a quarter of the adult population have been on a walking holiday at some point in their lives. Watersports account for around one fifth of activity trips; snowsports one in eight and cycling one in twenty. “Some of our customers are regular walkers, cyclists or skiers looking for comfort alongside their favourite activity, but many wouldn’t really define themselves by the activity – they are looking for an engaging varied holiday which perhaps stretches them a little and lets them do something different from the norm.” –Activity tour operator Page 15 of 16 303MKT 2014-2015 CORPORATE MARKETING STRATEGY APPENDIX IV ARTICLE FROM BIG HOSPITALITY – AUGUST 2013 Reproduced by permission of © William Reed Business Media Ltd 2013. Olympic ‘bounce’ giving UK hotels a welcome boost Please see this link. We have permission to distribute it in print form if necessary, but not to reproduce it online.