Corporations of every type need to market their products to their customers such that they are able to attract substantial number of customers (Blythe, 2008). Marketing consists of bloodline for any type of business. It is through marketing that a company is able to meet its revenue generation or profit making motives. The scope of this current report deals with a Boutique Hotel, The SOHO Hotel in London. The Hotel aims to attract customers from international arena from various target markets (www.firmdalehotels.com, Retrieved on 5th April 2017). While the Hotel conducts various marketing campaigns to attract customers, the scope of the report evaluates the effectiveness of such marketing strategies and improvisation of the same.
Figure 1 : The SOHO Hotel
Source: (www.firmdalehotels.com, Retrieved on 5th April 2017)
Introduction to The SOHO Hotel
Smaller the Package, better the services, is the major success feature of Boutique hotels like The Soho Hotel situated in the heart of London’s west end in U.K. 80% of income of this small luxurious hotel depends on low operational costs. The Hotel has few numbers of rooms and is based across multiple locations around the world especially in UK (Alon I. a., 2012). As London in UK is major tourist’s destination and business place there is a high influx of customers from around the world. The Hotel offers beautifully crafted rooms and well-decorated ambience with exquisite tastes such to cater to customer taste and preferences. The tourism industry in the UK has also grown multifold in the recent years with various flights landing in the city and it being easily accessible from various corners of the world.
Figure 2 : Location map of The SOHO Hotel
Source: (www.firmdalehotels.com, Retrieved on 5th April 2017)
A situational analysis refers to the environmental factors exerted by macro-environmental forces and industry level forces. These factors help analyse and understand the various the competition that acts within the industry and within the environment from UK (Kotler P. a., 2010). These situational analyses help determine the levels of promotional activities that needs to be carried out by the Company in order to maintain competitiveness.
Macro Environmental Analysis: PESTLE Analysis
Macro environmental analysis refers to the forces acting within the macro environment of London that let determine price and promotional strategies to be conducted by the Company. Macro environmental analysis is best conducted by means of PESTLE analysis (Dcosta, 2012). PESTLE is an abbreviated form for political, economic, socio-cultural, technological, environment and legal factors which has great impact on growth of small hotels business chains as The SOHO Hotel.
Political Factor: UK is still headed by the Queen along with the British Government. Improved political environment has enhanced business policies and structures which has provided better taxation which improves international business and tourism business of UK, which in turn directly helps hotel business.
Economic factor: Hotel business has been considerably gaining more up trade space due to more advance growth of economy. London is one of the most sought after holiday destination for the tourist from around the world which increasing business opportunities. Low inflation rate of UK is beneficial for economy in terms of employment. Lower inflation, favorable exchange rate attracts the travellers to choose UK as a holiday destination.
Figure 3: PESTLE Analysis
Source: (www.business-to-you.com, Retrieved on 5th April 2017)
Social factors: UK comprises of fully westernized society with prevalence of English culture system (Kotler P. B., 2015). London offers a mixed-cultural society due to influx of tourists and business person from around the world. Stay at The SOHO Hotel offers an unique feature of staying at an traditional English house, hence customers who prefers such tastes and preferences often prefers staying at the hotel compared to other modernized hotel suits.
Technological factor: Fastest growing technology around the globe has changed the working style of business. Upgrading of internet technology like Wi-Fi facility provided by small hotels as The Soho to attract more customers compared to other hotels that does not provide such facilities. Advertising online for the holiday package by tying up with agencies, helps to grow the hotel business through bookings.com, makemytrip.com and so on.
Environmental factors: The environmental norms of UK are quite stringent which focuses on minimizing wastes and reducing pollution (Fastoso, 2007). At the SOHO Hotel they are trying all means and methods to reduce pollution and create sustainable energy by installation of solar panels. The Company also is reducing pollution to all extent by adhering to several ISO standards and certifications.
Legal factors: The legislative norms and standards are quite stringent in UK that allows hotel businesses to function quite swiftly. The legal factors not only allow to function hotels like SOHO easily but also cater to their norms and standards (Mullins, 2012).
Transportation of UK is another significant cause of gaining hotel business with the best providing accommodation and attraction. The SOHO Hotel situated in the heart of London, which is more preferable by business tourist in view of their travelling convenience and business meetings compared to hotels situated in outskirts.
Industry Analysis: Porter’s Five Forces Analysis
Industry level forces of competition are best understood by means of Porter’s five forces analysis proposed by Michel E. Porter (Porter M. , 2008). This analysis reflects factors prevalent for business growth of boutique hotels like The SOHO in UK accordance to intensity of competition among the other hotels. This analysis caters to understand the five prevalent forces within industry that exert pressure on a company as supplier bargaining power, consumer bargaining power, rivalry amongst players, rate of substitutions and threat from new industry entrant.
Supplier Power: UK based boutique hotel has less popularity compare to that of high end hotels. Suppliers to these small ranged hotels generally has medium bargaining power which often leads these hotels to pay higher prices for supplies considered to luxurious hotels (Porter M. E., 2008). The SOHO hotel often has to bargain and maintain stable relationship with them.
Buyers power: Buyer power is the bargaining power of consumers, who come to stay at the hotel or book the hotel online (Varadarajan, 2010). The marketing skills that are used to attract walk-in tourist for booking of rooms is done at best possible price. A price is agreed upon which is affordable to guest as well profitable to hotel as manager will bargain in terms of hotel location, room facilities, Wi-Fi free service given by SOHO compared to other hotels in London. But in case of online reservation such bargaining power barely exists (Magretta, 2013). Thus, in the previous case buyer does not have bargaining power but in the second case they do have.
Rivalry Power: Hospitality business is today’s fastest growing industry in UK. The hotel needs more strategic inputs to attract clients towards rooms available at affordable rates featuring technology facilities, better food and staff services to make hotel more profitable than rivalry hotel of same nature available nearby. Hence there is prevalence of intense competition within the industry (Enache, 2011).
Figure 4 : Porter's Five Forces Analysis
Source: (monicakrish.wordpress.com, Retrieved on 5th April 2017)
Threat of New entrants: Hospitality business is continuously on the rise in the UK. Almost every day new hotel is set up in London city. This threat the profitable part of business, keeping daily updates regarding the industry helps to fight with new entries.
Threat to Substitute products: When the demand of hotels is effected by substitutes business as resorts, apartment availability, available at lower rates and better facilities it affects small hotels business, which directly attack the profit (Wilson, 2012). Substitutes as Airbnb and other stays in the market offer serious threat to the hotel.
2.3 Internal Analysis: SWOT Analysis
The SWOT analysis is method to draft a plan for business structure, by taking into consideration all factors favorable as strengths, opportunities and unfavorable factors as weakness and threats (Adkins, 2007). A comprehensive SWOT analysis helps reveal the various internal capacities existing in the business that can help combat any external potential threat.
- Locational advantage
- Easily booked online
- Easily assessable form any city destination
- Brand Identity and Recollection
- Affordable rates
- Stable customer base
- Accepts all currency types
- Specially designed rooms
- Varied chefs and cuisines available at restaurants
- Boutique hotel hence limited room numbers
- Limited opportunities to expand within London
- Non-availability of resort like facilities as swimming pools and other facilities
- Online booking Services by tie up with travel companies
- Adding star category rating to the hotel business
- Market to developing nations
- Create awareness programs for the hotel
- Falling currency rates of Great Britain Pounds
- Recession in UK
- Competing hotels offering cheaper rates
Marketing practices is a business activity that companies adopt to meet needs of consumer. Consumers form the backbone of tourism industry. Better the consumer demand more the profitability (Aaker, 2008). The marketing practice that is adopted by the hotel is through online booking channels and promotional tools. The hotel due to its lower number of rooms adopts a conservative marketing strategy and it barely markets its features. However, due to the current trends in marketing practices there has been less demand for the rooms of the hotel as compared to previous years hence, the Company has decided to adopt a suitable marketing practice for the same.
Market segment allows to target appropriate market such that suitable customers are attracted towards the products of the company (Ferrell, 2012). As SOHO hotel is a boutique its target customer group is small however the following will allow a detailed customer segment analysis (Armstrong, 2014).
Demographic Segmentation: The hotel’s customers comprises of both the genders, from age group 25 years to 65 years of age. The income level that the hotel will target is middle and upper income group customers.
Psychographic Segmentation: The target consumer profile of the Company will consists of consumers who are travelling to London, UK for business as well as for holiday (Jain, 2009).
Geographic Segmentation: The Company will target consumers from all over the world, especially from developed nations.
The marketing mix comprises of factors that determine marketability of a particular product. There are four factors of marketing mix that allows companies to target their focus customer group as price, place, product and promotion (Goi, 2015). For the scope of the current research hotel the SOHO, the marketing mix is discussed as below.
Price strategy too is a significant part of marketing as well as in promotional conduct. Pricing a product for entry in new market to attract customers is very imperative (Atilgan, 2009). Higher the price of a product, lower the sales in a normal market. Promotional and advertising a product needs money, as hiring a sales executives for marketing to draw attention of competitors existing customers (Doole, 2008).
Pricing can be categorized into penetration pricing, which is a promotional pricing, to attract new customers. The SOHO keeps room rates initially lower than nearby hotels to attract guests or tourist, once it is able to attract customers it will gradually increase the tariff. Another method that the hotel can adopt is skimming pricing, whereby they will first increase the tariff and then cut the rates to earn profit at every level (Zinkan, 2012). And lastly it can also adopt competition pricing, where initial rates while opening a hotel, will be the same rate as competitors with extra add on facilities at same rate, location, and services.
Place strategy is the king strategy of any business promotion and marketing mix of any product or service industry (Kotler P. a., 2010). Service provider should first understand the demand of the consumer in the market prior to launching service business. Place being one of the components of 4P’s as distribution strategy, in this case both through physical and online advertising can be adopted. Promotional activity through online tie-up with other country’s tour companies as well online hotel booking websites can be opted for. The hotel being situated at the heart of London city has an advantage for its business to make profits as it has a favorable location (Alon I. J., 2013). Hence, it can also opt for direct sales method like hoardings, or newspaper advertising and so on.
Promotional strategy is the continuous effort of business to maintain its market monopoly. Hotel business does not need marketing mix any further once it is famous, to attract tourist or client. Its management team will need to upgrade new technology, facilities, room tariff discounts and other offers keeps the old customers in, and through best service by staff and excellent reviews by current clients brings new flow of customers (Dens, 2010). Advertising and promotion encourage the people to visit once, book and stay at hotel.
For SOHO hotel direct Promotion can be done through social media as Facebook, Twitter, Pinterest and Google advertising. Other promotional activity as online discounts offers through tie ups with many ticket booking websites, holidaying tourist attraction through packages and extra facilities as free 24 hours Wi-Fi, complimentary breakfast and free pick up and drop airport facility can offer the hotel edge over its competitors. Business meeting space facility along with stays in offseason to maintain existing customers regular visits, giving them more preference during vacation season can attract more customers (Arora, 2011). These strategies can greatly help in attracting new customers and in retaining the old ones.
Each type of business and its functionality poses some or the other type of risks. In each case nature of risks has to be evaluated, measured and then a proper treatment for the same has to be decided upon (Albaum, 2008). For this hotel promotional plan there might be several types of risks as detailed below and treatment for which is provided depending upon its nature.
Type of Risk
Incapacity of meeting price provided
At every stage of promotion the price committed to customers has to be frequently evaluated
Unavailability of rooms
While committing rooms to customers, availability of rooms has to be assessed to avoid double bookings
Accept in currency rate of the current day only
Very low, Avoid
Offer insurance covers for each room such that it is easier to pay out to customers
Table 1 : Risk Assessment Matrix
Conclusion and Recommendations:
The analysis of marketing plan of the SOHO hotel reveals that while it has been able to reach out to its desired customer base, it can further enhance its reach. The hotel has immense capability to attract and cater to a variety of customers through its online marketing and promotional features. The Company can further increase it number of rooms and request customer feedbacks such that it is able to gain substantial customer inflow.
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