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Campaign Strategy

Discuss About The Intercontinental Group Hotels Based In US?

Hotel Indigo is one of the InterContinental Hotels Group (IHG) launched in 2003 in US. Since then, it has experienced a rapid growth that has seen it operating in all the four regions of IHG’s. It is taken a position in the sector as an upscale boutique brand which specializes in delivering a refreshing and inviting guest experience. Although it is set to double in size the portfolio in the coming years. Currently, there are 70 Hotel Indigo branches found within US and other continents like Asia, United Kingdom, Costa Rica and Canada (IHG, 2017, p. 2). There are more than 9,515 open rooms.

In 2011, Hotel Indigo was ranked highest in guest satisfaction by the 2011th North America Hotel Guest Satisfaction Index Study. This was made possible by the dedicated staff at the hotel. In fact, the 2010 IHG employee survey showed that 93% of Hotel Indigo employees love working here (IHG, 2017, p. 2). Some of the services offered by Hotel Indigo include; Bar/bistro, 24 hour business center and fitness studio, spa-inspired bathrooms, plush bedding, luxurious guest rooms, gust loyalty programs and locally reflective designs. Moreover, the hotel provides a Priority Club Rewards system that has more than 61 million members (IHG, 2017, p. 2). This is the largest number in the hotel industry.

Developing a strategy needs an extensive research to understand the business environment and main competitors. I hereby provide three strategies that could be used by the management to move the business forward. The alternatives for the company are; concentric diversification, market development and market penetration. These strategies are built on the nature of hotel management like our clients and suppliers. If implemented well, these strategies will result to an increase in sales and the general profitability of Hotel Indigo. Then a decision matrix is provided to help arrive at the best alternative.

This strategy involves adding new or related products to the market. For example, in Britain, the National Westminister Bank PLC bought Legal & General Group PLC.As a result, the company recorded higher profits in consequent years (Christopher, 2016, p. 35). To make this strategy efficient, Hotel Indigo will need to have a strong management team that can handle change effectively. Possibly they may experience an initial decrease in hotel bookings because more customers will be reluctant to experience new services. The management team will need to take charge and assure staff and clients that there is no need for worry because things will improve once customers have familiarized with the new services.

Concentric Diversification Strategy

This strategy involves introducing present products and services into a new geographic area. For example, Khuzendar Company that deals in tiles introduced its products in the Gulf region (Ray, 2016, p. 42). As a result, the company made more profits and instilled customer loyalty among its customers in that region.

Hotel Indigo needs to apply this strategy to introduce hospitality services to markets in other regions apart from the US, UK, China and Canada. For example, there is an increase in demand for hospitality organizations in countries like Rwanda which is experiencing an increase in the number of tourists coming to see wildlife. Meaning, this industry is gradually becoming global justifying the need for Hotel Indigo to expand to other regions worldwide. However, the management should be ready to hire more staff since expansion means a larger workforce. Also, more resources are needed to do market research in terms of cultural orientations

This strategy is used by a business when it is seeking increased marketing share through intensive marketing programs. For example, Ameritrade doubled their advertising revenues to $200 million (Ray, 2016, p. 43). This move convinced consumers that the company was in a position to make wise investment decisions.

Hotel Indigo should use this strategy to increase the rate of usage of services by customers. This is because the hotel and hospitality management industry is not saturated (Christopher, 2016, p. 36). Moreover, the market share of big players in the industry is gradually declining hence Hotel Indigo can make good use of this opportunity by penetrating the market more.

The social marketing theory outlines elements that could be used by Hotel Indigo to increase market share. The main objective of this theory is to understand ways in which psychological and societal aspects work and lead to effective mass media campaigns. Therefore, the theory is directed towards helping identify the various social and psychological barriers that challenge the free flow of information in mass media and suggest ways to overcome the same. For the purpose of market penetration campaign strategy, it would be best to focus on three elements of this theory; creating messages, right audience target and reinforcing messages.

Usually, the first step in selling an idea, behavior or product is through making people aware of its existence. This can be done through readily available channels like traditional and electronic media. Having a saturation television has for a long time been preferred as the best way of creating awareness. However, due to its high nature, people have come to adopt new media like the Internet whose main strength is it wide audience reach. Specifically, seeking the services of the Internet helps to reach young people, who do not use traditional media like television and newspaper frequently.

Market Development Strategy

Every type of information has its designated target. This theory holds that before packaging and disseminating information, an analysis should first be done to determine the specific audience that requires the information (Truong, 2015, p. 238). This helps in identifying the efficient and appropriate means of transmitting the message. Additionally, it helps in cutting costS and ensures that the message has reached a wide audience.

Similarly, the effectiveness of a message depends on the extent of reinforcement. This is because people tend to forget new messages hence it is necessary to ensure that they are repeatedly reminded of it (Morschett, 2017, p. 85). This is the main idea of reinforcing a message; ensuring that the information does not go with the wind. Reinforcement can be done through a variety of channels such as using mass media; conducting debates over ways in the message can be reinforced, carrying out group discussions etc. Eventually, people are transformed into agents of the massage through reinforcement.

To influence decisions, people may follow different paths depending on the set goals set. Theories are not only bodies of knowledge but they also aid in decision making hence often applied by many organizations to improve quality and productivity (Silva, 2015, p. 87). Social marketing theory is directed towards helping identify the various social and psychological barriers that challenge the free flow of information in mass media and suggest ways to overcome the same. Therefore, Hotel Indigo can improve its market share through making more people aware of their food delivery services and the future plans to accommodate more products in their list.

Evaluating strategic alternatives is a difficult task. This is because the decision should be meet a certain criteria to be implemented. This report uses the decision matrix to weigh the three alternatives suggested. The group gives out the criteria to evaluate the alternatives. The factors to be tested are: profitability, customer satisfaction, acceptable risk, flexibility, and implementation ease and employee morale. All criteria are equal hence a simple ranking order is best for this project.  We have used a 1-5 ranking. 1 refers to the method that least meets criteria and 5 indicate the method that best meets the criteria. The following is a decision matrix we used to weigh the alternatives.

Alternatives

Concentric Diversification

market development

Market penetration

Criteria

Profitability

4

3

5

customer satisfaction

2

3

4

Acceptable risks

2

4

3

Flexibility

2

2

3

Implementation ease

3

3

5

Employee morale

4

5

3

Totals

17

20

23

From this matrix, it is seen that market penetration is the best alternative for Hotel. It will help the company achieve competitive advantage through delivering a luxurious hotel experience that cannot be found in or matched with any other hotel. Also, it will help the hotel maintain its position in the hotel industry market shares.

Market Penetration Strategy

The target market for this campaign strategy is divided in three categories; demographics, behavioral and attitudinal. In terms of demographic, the target market consists of 50% male and 50% female. They should be between 35 and 54 years who are married (IHG, 2017, p. 3). They may also have children. Lastly, in this category, the market is made up of people graduates earning between $70,000 and $200,000.

In terms of behavior, this campaign is directed at people who like staying at the hotel for both leisure and business. Also, it is directed at people looking for something different and brand benefits (Babbie, 2015). More importantly, the campaign is directed at people who are passionate about intimacy and personalized experience.

Lastly, in terms of attitudes, the market penetration strategy is targeted at people in developed countries who are lovers of technology and use it for most daily activities. People in this category love traveling and exploring but are less worried about over the top service (Babbie, 2015, p. 57). Similarly, they have an eye for design because Hotel Indigo is passionate about customizing hotel rooms and experiences to local cultures.

The main competitors of Hotel Indigo are Holiday Inn, Crowne Plaza, Staybridge Suites and Candlewood suites. One of the qualities that make customers prefer competitors over them is budget. Compared to the 4 hotels, Hotel Indigo charges higher rates. This means that during harsh economic times, customers prefer competitors for offering services within their budget.

According to IHG hotels survey conducted in 2010, the hotel industry experienced a shift in market share. For example, in the previous survey, Holiday Inn had a 3% market share in the hotel industry but by 2010, the number increased to make up 5% (Grant, 2016, p. 32). This shows that there is stiff competition between players thus a need for Hotel Indigo to implement a campaign strategy that will increase demand for their services worldwide.

This can be made through increased marketing programs that use social media. This channel is effective because of new trends in the target population. Today, people prefer to use the Internet for activities like shopping, education and entertainment. Therefore, it is more convenient for them to search for information regarding Hotel Indigo through social media pages or referential from friends who have used the social media and watched TV adverts.

Hotel Indigo’s main competitors have not yet implemented market penetration campaign using social media. This is a big opportunity for Hotel Indigo. If implemented effectively, it could increase its market share, productivity and profitability.

Social Marketing Theory

For this campaign, we shall use social media as a channel of communicating about our brand, create unique content, optimize content, follow-through and track results. Social media consists of platforms like Website, Facebook, Youtube and Twitter (Haddon, 2016, p. 8). The following diagram shows how we shall use social media to enable the market penetration strategy through providing information, starting interesting conversations online, answering customer questions and helping in travel plan:

Increased and improved use of social media in market penetration will enable Hotel Indigo achieve three main things; Creating new demand, converting lookers to bookers and retaining guests. In creating demand, it will ensure that the brand is exposed to new potential customers in compelling and relevant ways (Ray, 2016, p. 46). Consequently, we will achieve more calls, clicks and visits. Similarly, it will ensure that people who visit the social media sites are persuaded to make new bookings because of finding options satisfying their needs. Lastly, using social media will help in retaining our guests. This is through ensuring that what we have promised on the sites is seen through hotel experience.

The main element of promotional mix to be used in market penetration is advertising. It is a form of non-personal promotion. Therefore, the company will be required to pay various media outlets to promote the features of Hotel Indigo’s services. Because the company has hotels worldwide, it would be best to use a medium that has a wide coverage. For example, it could international TV stations like CNN and BBC. Using these channels will equally contribute to increase in demand for our hotels in regions where we are not yet established. It will also make customers used to our hotel experience to continue booking us. Advertising will contain information on the locations of the hotels, website, booking processes and neighborhood features finanacial. This element of promotional mix will increase the rate of bookings thus increasing profitability.

In addition to advertising, the hotel could also employ public relations. This method will not only reinforce the advertising messages but also create customer loyalty and favorable image for the hotel. For example, the hotel can give regular news releases announcing its progress. Also, it can take part in community projects.

To know the progress of a strategy, it must me measures against to show its success, failure or weakness. In this section of the report, the KIPs of market penetration strategy are explained.

Key Decision Criteria

This is the percentage of available rooms occupied during a particular period. This metric is essential in measuring the performance of a strategy by demonstrating the efficiency and effect on the operations of the hotel (Jorgensen, 2016, p. 339). In context of market penetration strategy, it will help in identifying the increase in Indigo Hotel bookings.

This metric is used to measure the average price paid per available room. This way, it enables the hotel to measure profitability and financial performance of the strategy (Jorgensen, 2016, p. 340). If the prices of rooms go higher because of increase in demand resulting from the company having new visitors and customers, then the strategy would be effective and should continue to be implemented.

It is used to measure the average room revenue per available room. It is best suited for conducting a comparative study of past and current performance (Jorgensen, 2016, p. 342). It is usually viewed using other factors like profitability and financial performance. In the context of market penetration strategy, this metric helps in understanding comparing the cost of the marketing programs and revenue generated from rooms.

This metric is used to measure the demand for rooms using the average supply in a particular market (Jorgensen, 2016, p. 343). This is made possible by data on the performance of hotel industry on internet sites like Trending. If there are increases in demand for Hotel Indigo rooms in a particular region, this would mean that the hotel is making progress in that area hence contributing to the general profitability of the hotel.

This measures the occupancy of the hotel in relation to market occupancy levels. It helps in indicating the market control of hotels based on operational parameters (Jorgensen, 2016, p. 344). This KPI enables companies to assess performance in comparison to competitors in the market. It helps in improving competitive advantage.

Item

Price

days

Total

1

Website designer

$650

4

$2600

2

Advertising on CNN

$5,000 for 30 seconds

30

$150,000

3

Website (Home page lead feature)

$1500

4(per week)

$6,000

4

E-newsletter

$100

4 (per week)

$400

Total monthly budget

$159,000

This program should be run for 3 months. The web designer is necessary to improve the outlook of the hotel’s website and other social media pages.

In conclusion, this report proposed and analyzed the market penetration campaign strategy to be used by Hotel Indigo. Also, it provided the communication channels best suited for market penetration and Key Performance Indicators to be used in assessing the performance of the strategy. Implementing a strategy is a process that needs cooperation and collaboration to be successful. Therefore, I would recommend that all stakeholders be included in the process.

References List

Babbie, E. (2015). The Practice of Social Research. Nelson Education .

Christopher, M. (2016). Logistics & supply chain management. Pearson UK.

Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Haddon, L. (2016). The Social Dynamics of Information Communication Technologies. The Journal Of Internet Banking and Commerce , 5-12.

Hubble, E. (2017, February 7). 7 Food Delivery Industry Trends for 2017. Retrieved July 22, 2017, from https://www.veinteractive.com

IHG. (2017). Our Story. Retrieved August 30, 2017, from IHG: https://www.ihg.com

Morschett, R. G. (2017). Determining the Target Markets. In Developing International Strategies , 85-104.

Ray, J. (2016). Abercrombie & Fitch: A Strategic Position.

Silva, E. (2015). Social marketing for women's health control. Journal of social marketing , 89-97.

Truong, V. (2015). Social marketing quarterly. Elsevier , 230-248.

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