Practise explaining physical evidence in the extended marketing mix, using hotel environments and customer experience examples for IB Business Management SL.
The Imperial is a seaside hotel in Mombasa, Kenya. It was founded in 1906 by Roger Williams, a citizen of the United Kingdom (UK) who had made a large fortune in the primary sector of British East Africa. Identifying a market opportunity and wanting to diversify his investments, Roger founded The Imperial. The Imperial initially had some financial problems, especially regarding cash flow and liquidity management. Roger operated the hotel as a sole trader. By 1920, The Imperial was the most famous seaside hotel in Mombasa: it had a very positive corporate image and a well-deserved reputation for its grandiose architecture, its high-quality service and its elegant décor. It held that reputation for several decades, until the 1950s.
When appointed manager, Martin had to address a long-term problem: the fact that over the years, the competitive position of The Imperial as Mombasa’s premier seaside hotel had slowly deteriorated. New luxurious hotels were opening in the vicinity; with their spas, themed restaurants and fast WiFi Internet access, they offered better facilities and better services than The Imperial. They had a modern, high-tech feel; in comparison, the colonial charm of The Imperial looked old-fashioned.
A French travel journalist who had recently stayed at The Imperial had written an article praising the high quality of its housekeeping: “We reach here the top of the highest international standards”, he wrote, “in terms of benchmarking, The Imperial is très magnifique”.
Option 3: Form a strategic alliance with the famous safari tour company KenSafar. Together they would offer a two-week package tour. Customers would arrive in Mombasa, spend three nights at The Imperial, go on a seven-day safari tour, and then return to The Imperial for four more nights. This would allow tourists to go on a safari, first getting adjusted to the time zone and climate and later rest for four days before returning home. The owner and manager of KenSafar was Kamau Onyango, a spontaneous, dynamic and charismatic Kenyan who had many networks and contacts, and intuitively knew market trends, even without market research. Kamau insisted that if the strategic alliance were to go ahead The Imperial would have to:
• make some improvements to the appearance of the hotel
• pay Kensafar a 20 % commission for all hotel guests staying at The Imperial and booking through KenSafar
• undertake a marketing audit.
Martin and Susan had similarities: they were the same age, had similar university educations, and neither fitted perfectly well in Kenyan society. They had, however, an important difference: their leadership style. Susan, though efficient, hard-working and committed, was very task-oriented. She liked bureaucracy, formal accountability, and a clear chain of command. She had a scientific approach to decision-making. Her staff found her cold, official and impersonal. Martin, on the other hand, had a much more laissez-faire style. He believed in empowerment and delegation. Though he felt anxious when he saw there were minor problems that he knew he could fix quickly, he was always careful to let supervisors resolve problems. He was also warm, friendly and outgoing.
Once a year the hotel manager and a GP representative calculated the break-even quantity, set target profits and determined the margin of safety. Break-even analysis compares fixed costs, variable cost per room and selling price to identify the output at which total revenue equals total costs. Martin believed in empowerment: supervisors and employees were allowed to take responsibility and resolve problems rather than waiting for him. For a hotel, place includes Mombasa’s seaside location, private beach, access to the airport and channels through which customers book; physical evidence includes the building, grandiose architecture, rooms, elegant décor, housekeeping standards and other visible service cues. Martin’s three choices were Option 1, closing for a year to renovate and relaunch the hotel for similar customers; Option 2, converting rooms into self-contained apartments for business travellers staying at least one week; and Option 3, forming a strategic alliance with KenSafar to offer package tours.
Explain the following two elements of the marketing mix in the case of a hotel such as The Imperial: place and physical evidence.
Place refers to distribution channels, ie how the business (the hotel) can ensure that customers gain access to its products (the rooms);
put another way, how potential guests book a room at The Imperial. Option 3 (strategic alliance with KenSafar) is a new distribution channel for The Imperial;
the tour company would ensure a steady flow of guests staying at The Imperial, though of course there are conditions attached, such as paying KenSafar a 20 % commission, which is high. Alternatively, for its distribution, The Imperial could use online tour operators (websites such as Expedia are often used by hotels).
Physical evidence refers to the aspects of the hotel that guests directly experience, for example the lobby and reception area, the old-fashioned furniture and their old colonial style. Although The Imperial does not offer the same facilities as some of its competitors (lines 50-51), the physical evidence itself seems very good overall, as noted by the journalist who praised the housekeeping at the hotel (lines 106-107).
Accept any other relevant explanation.
Mark as 3+3.
Award [1 mark] for each correct definition (of place / physical evidence), and [1 mark] for each development/exemplification of that element of the marketing mix, up to [2 marks]. Award up to a maximum of [3 marks] for each element.