Practise explaining how people shape the extended marketing mix and influence business marketing decisions for IB Business Management HL.
Turners
Turners is a famous hotel located in a large city. It is positioned as having the highest quality of customer service and most of the employees have worked for Turners for over ten years. Regular customers like knowing the employees at reception and other areas of the hotel. Many customers have commented on the unique style of customer service at Turners. They like the fact that the people in the photographs used in promotional materials are actually the people they interact with when staying at Turners.
Turners has an expensive, award-winning restaurant. Turners had used a price skimming strategy with room rates at over $1000 per night. However, new competition from three other recently opened hotels and other changes in the external environment have resulted in revenue becoming more cyclical. Profits are falling.
Surprisingly, the General Manager, Shane Peterson, also received some negative customer feedback from a random sample of customers. Firstly, they claim that Turners' online booking system is slow and unreliable. Customers complain of an overbooked restaurant and untidy leisure facilities. Business customers argue that the newer competing hotels offer better customer service, high-speed internet and other business services for no extra charge. As a result, Shane is reviewing Turners' marketing mix.
Shane has to focus on improving customer service as well as reducing costs. He is considering two options:
- Reducing labour costs by implementing Handy's shamrock organization.
- Outsourcing Turners' staff training programme. Currently, it uses an internal, on-the-job staff training programme where experienced staff train new employees.
The cost savings from using Handy's shamrock organization would reduce salaries and wages by 7 %. Outsourcing Turners' staff training programme would reduce training costs by 9 %. These combined savings could allow Turners to offer high-speed internet and other business services for no extra charge to customers.
Explain the importance of people, process and physical evidence for Turners.
For Turners, the people element of the marketing mix is critical, given the intangibility and the unique nature of the service. As the hotel is perceived as having the highest quality of customer service and the staff / people enabled Turners to create a USP. It would appear that until recently, this aspect had allowed Turners to differentiate itself away from the competition.
Process involves the ability of Turners to successfully allow customers to book and pay for services offered. Currently, the online booking system is slow and unreliable and this will impact on the process element of the mix and impact on customer service, which from the point above is also under threat. The interaction between the customers and the staff can also be explained as process. It is clear from the stimulus that guests judge their experience based on the interaction with the staff, hence this element of the marketing mix is also very important.
Again, given the intangible nature of a service, a high quality hotel with price skimming such as Turners will also depend on the physical evidence (surroundings) to reinforce its positioning. Untidy leisure facilities and an overbooked restaurant will hardly help the positioning/perception of the hotel. Importantly, business customers are indicating that the competition is offering improved services for no extra charge. Shane will have to address this issue quickly.
Mark as 2+2+2.
Award [1 mark] for the importance of each P described, award an additional [1 mark] for the development of the response and application to Turners up to a maximum of [2 marks] for each P.