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  • Published on: 14th September 2019
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The Singapore government is gearing up to build a Smart Nation which has indirectly boost the hospitality and tourism industry. Some of the new initiatives involved such as advancing in technology in the hotel industry that have created a shift towards smart hotels. This has resulted positively in terms of external factors positioning Singapore as a market leader accounted for the largest number of international meeting among all the cities in the world (Appendix 1). Singapore's stability in politics, economic, social and technology has helped to improve the quality in providing better service delivery, making Singapore Hospitality and tourism industry even more attractive as a destination. Singapore also has rose in the economy and serve as a global commence, finance and transportation hub attracted and boast the hospitality and the tourism industry to a large extent (Kim and Chee, 2018).

Singapore is known for its unique and highly developed buildings amongst tourists and locals. According to the World Travel and Tourism Council, Singapore's tourism sector contributed 10.2% of its Gross Domestic Profit (GDP) in the year 2017. This makes tourism as one of the main supporting industries for Singapore's economy. This report aims to focus on the influence of external environment that helps or hinders Singapore's tourism and hospitality organizations. The external environment that this report will looked into is the PEST analysis and Michael Porter's 5 Forces analysis. Apart from that, this report will also look into the marketing tools that can be used in response to the changes in the external environment.

PEST analysis is a form of external environment analysis to analyze the threats and opportunities in the industry that may boost or hinder industry development. Also, it shows the direction of change within the business environment and works as a guideline to shape what businesses are doing so that they work with the change instead of against it. PEST analysis includes Political, Economic, Social and Technological factors of the environment. Singapore has a strong government intervention in term of its legislation.

Singapore is a very systematic enterprise friendly country. Singapore has a stable political growth which is a great advantage and boast the economy. This has indirectly invited many foreign direct investment and this has benefited global investor and institutions to invest in such a highly attractive climate. The flexible immigration policies has attracted many entrepreneur to settle down and invest in business in Singapore. The high standard of living, top notch labor force and outstanding taxation system has contributed to make Singapore as one of the factors and contribute to the advancing for foreign investment in Singapore and this boast the hotel industry (Lee, 2015).

As Singapore is making tourism as an investment industry (Dagnino, 2017), the Singapore Tourism Board (STB) built on its Hotel Industry Transformation (ITM) which was launched and served as a road map for hotel to evolve into “Smart Hotel” through the “Smart Hotel Technology Roadmap”. This has helped hotel owner to enhance their technology and attracted many more tourists into Singapore and improve business in speed

The Singapore government has implemented the Go Extra Mile Service (GEMS) in order to help improve and encourage better service. Its government expects higher tourist arrival every year and a major influence that will help achieve this is from the hotel businesses performance. With this service goal being implemented, the hotel businesses in Singapore must ensure they give higher than expected services to their customers. There were close to 2,500 hotel rooms introduced into Singapore's hotel supply in the second half of 2017 .

The enforcement unit in Singapore are efficient with a very low corruption rate. They maintain a positive image of keeping Singapore a low crime rate country. In addition, Singapore's taxi service where customers pay by meter makes sure that they do not get cheat by additional rate created by the taxi drivers. Taxis in Singapore are monitored and regulated by the Land Transport Authority and this gives passengers, especially tourists a peace of mind using Singapore's taxi service. Both of this aspects actually helps boost a positive image to Singapore's tourism industry and may benefit the businesses in it (Lee, 2015).  

Singapore's economy develops at a rapid pace as the per-capita income of the country is considered the highest in ASEAN. Recently, the Singapore government has invested a lot in diversifying its economy and this has led to a positive growth in the tourism industry. With a thriving tourism market, coupled with strong SGD, high quality of hotel assets, and security of the Singapore economy, the outlook of foreign investment in hotel industry is looking very positive.

Due to Singapore prioritize its citizens employee opportunities, they have a relatively strong purchasing power. In terms of hotel industry, its customers are not only focused on the tourist who comes visiting the country but also the locals who looks for a small gateway after a hectic week in work. Therefore with the increase in disposable income amongst Singaporeans, people are willing to pay more for better service.

The rules on hiring foreign workers under visa are tightened as part of the government efforts to ensure the workforce quality and job opportunities for Singaporeans. The Ministry of Trade and and Industry (MTI) priority mission is to promote economic growth and create jobs for Singaporeans in order to improve the standards of living (MTI, n.d.). Under the Fair Consideration Framework, more companies must give the opportunity for Singaporeans to apply for higher position jobs (Seow, 2018). The Ministry of Manpower; Minister Lim Swee Say, said ‘we need to maximise the local expertise with the ratio of two third local and one foreigner rule' during his recent debate on ministry budget (Seow, 2018). Therefore, companies in the tourism and hospitality industry must ensure that they follow the employee ratio under the law that has been set by the government to maximise the local skilled workforce.

3.2.3. Globalisation

Globalisation is a trend to a world without boundaries and with the evolving technology nowadays, globalisation can happen in a blink of an eye. There are a lot of positive impacts that comes from globalisation and can benefit the hotel and tourism industry of Singapore. One in particular will be the opportunity to have a larger market. Due to globalisation, customer base in the hotel and tourism industry is seen to increase greatly because people nowadays not only travel for business and holidays, but also for health and various other purposes. This will be an opportunity for hotel industries.

3.3. Social Analysis

Singapore is a modern country that still follows the traditional family values with an open minded concept. The social impact of Singapore towards the hotel and tourism industry is relatively normal as Singaporeans are more open on accepting tourists in Singapore. However there are several social factors that may influence the Singapore hotel industries which are:

3.3.1 Lifestyle

As a modern country, Singapore citizen's lifestyle are improving by year. Therefore, when it comes to providing service, they seek for a more quality and value added services from the hotel businesses. Also as a country of tourism hub, Singapore welcomes a huge number of visitors and their standards of service must always be on top of the customer's expectation.

3.3.2. Employee Benefits

In Singapore, employees who are earning more than SGD500 a month must pay the Central Provident Fund a sum of their wage for the retirement program. This retirement program has been set up to provide a total amount of money to benefit them at their old age, disability, death and sickness. The employee contribution are based on their monthly income and their employers must pay 10% from their monthly earnings. However, is the employees earn less than SGD200 a month, they will be exempt from this. Therefore, hotel businesses must remember their part on contributing to the pension scheme that has been set for the employee benefits.


3.3.3. Green Issues

As customers become more aware of the green issues evolving around the world, they expect hotels to become more ecofriendly. As going green starts to become more of the ‘it' topic among customers, hotel industries must makes sure that they offer some of the green elements to their business. It would be of great competitive advantage if hotel businesses makes a contribution to the environment by promoting that they are taking some measures to reduce their energy consumption. According to (Bohdanowicz and Zientara, 2008), environmental sustainability in hotels has contributed to the  social responsibility in the hospitality industry, and had implications for human resources management, for the support of the local community, and the promotion of environmental sustainability in the surroundings of the hotels,

3.4. Technological Analysis

Singapore is considered as one of the global pioneer when it comes to new technology innovation and digitalisation. There is no coincidence for Singapore to support hotels on technology innovation. Millennials who are also traveling to Singapore seeks digital convenience that is beyond the offerings of just free-wifi and this leads to the race of technology innovation amongst hotel businesses.

3.4.1. Emerging New Technologies

New technologies such as mobile applications makes it easier for customers to find out about the hotels available in Singapore. Applications like ‘Booking.com' helps to promote more hotel business and this benefits hotel businesses in attracting customers.

3.4.2. Internet of Things (IoT)

Hotels increasingly installs smart room access in their rooms to increase the safety and security for the customers. With the installation of smart room keys technology, customers will not have to worry about handing in their keys before leaving the hotel as they can just bring the card access around. Also, hotels does not have to worry about guests losing their keys as it is easily replaceable. The concept of adapting IoT to the hotel guest room will help personalize the room according to the guest needs and this provides them with a more memorable experience that is supported by digital innovation (Topolewski, 2015). 


3.4.3. Increase Usage of Social Media

Technology has slip into almost every aspect of our lives and hotel businesses needs to realise that majority of people checking in their hotel will have a smartphone in their pockets (Topolewski, 2015). Social Medias such as Twitter, Facebook and Instagram are being highly used to update their daily activities. This can be an advantage for hotel businesses to promote their hotels on social Medias.

4.0. Michael Porter's 5 Forces Analysis

Michael Porter's 5 forces is a tool analysing the level of competition in the industry and how attractive the industry is. Knowing the macroenvironment of the industry will benefit businesses to stay competitive and sustainable. Whether the hotel business is established or brand new, the fundamental Michael Porter's 5 forces will consist of the threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers and the competitive rivalry that helps to determine the profitability of the business.

4.1. Threat of New Entrants

The threat of new entrants depends on the barriers to enter the market. Hotel industry is characterised in between growing and mature as it depends on the level and quality the hotel offers. The entry barrier of the hotel industry in Singapore is seen as moderate because it requires high capital costs and there are considerable amount of economies of scale to be achieved in the hotel industry. Capital cost to set up a hotel business will include furniture and equipment cost, technology, operations and many more. The minimum number of rooms to achieve economies of scale for hotels in a metropolitan city like Singapore is around 300 rooms. New entrants will find it hard to compete in terms of gaining customer trust as they need to spend a high amount of promotional cost. However, it depends on the quality of service, location area and price that they offer (eg; the difference between 2 star hotels and 5 star hotels). Overall, the threat of new entrants in the Singapore hotel industry is considered as moderate.

4.2. Threat of Substitutes

The constant challenge faced by the hotel businesses is to get the customers to choose your service instead of your competitors. Especially with the technological advancement nowadays, internet makes it easier for competitors to win customers as it expands the size of the customer market. Substitute factors influencing the hotel industry can be the location customers look into, the environment they aim for and the price competitors offer. Competitors with similar level of service with lower price may win customers over (Cheng, 2013). Also, the emergence of the concept ‘AirBnB' has threatens the hotel businesses. It is considered as one of the biggest substitute threats for the hotel industry as they offer cheaper rooms for tourists, resulting hotel businesses to lose customers (Gerdeman, 2018). Overall, the threat of substitute in Singapore's hotel industry is relatively high.

4.3. Bargaining Power of Buyers

As discussed with the technology advancement, it has become very easy for customers to go online and survey the best deals and offers from hotels. They no longer need the help from travel agencies or any middle men to determine where they can get the best services (Tavityaman, 2011). This increases the buyers bargaining power in the hotel industry. They can use internet to discover the bargains that competitors are offering, resulting to a low switching cost amongst customers. Overall, the bargaining power of buyers are considered as high.

4.4. Bargaining Power of Suppliers

In the hotel industry, the main suppliers providing them will be their employees as it is in the service sector. Without employees providing high quality level of services to customers, it may highly affect the business in terms of performance and reputation. The ability to retain and attract excellent employees can create a big opportunity for the hotel businesses in providing excellent experiences to their customers (Tavityaman, 2011). Apart from employees, their other suppliers will be the software engineers and all of the other substantial things in the value chain. Keeping a good relationship with both primary and secondary suppliers are important for the hotel business in the long run. Without them, their quality level of service may drop, affecting their brand name and reputation.  However in the hotel industry, the bargaining power of suppliers works as a two way manner as they are both dependable on each other. Overall, the bargaining power of suppliers in the hotel industry is assessed as moderate.

4.5. Competitive Rivalry

The rivalry among companies in the hotel industry are high and intense. They compete on the basis of quality, price and experience. The offerings from hotel businesses are substitutable and each hotel brand strength are comparable among each other. With it being substitutable, hotel businesses must always find ways to continuously innovate and distinguish themselves from each other in order to create added value to their services (Cheng, 2013). Overall, the competitive rivalry in Singapore's hotel industry is assessed as high.

In the case of hotel industry, Michael Porter's 5 forces is seen as crucial to determine the survival of the hotel business as it provides the opportunities for hotel businesses to expand and know their current industry situation. In conclusion, the industry environment forces in Singapore's hotel industry is seen as relatively high. This is because with the intense rivalry among competitors, companies need to always make sure they stay relevant amongst customers in the market.

5.0. Marketing Tools

There are various tools that are at the disposal of the marketing departments in hotel industry. Marketing tools are the methods that are used by the marketing teams in terms of promoting the goods and services offered by the company in the industry. Marketing tools includes all types of advertising that is divided into three parts; above the line, below the line and through the line marketing.  The marketing tool used in appendix A would allow the hotel companies to differentiate itself and maintain some consistency to ensure customer satisfaction and at the same time deliver what the brand promises. This also allow penetration on the percentage of travellers into Singapore.

5.1. Above The Line

Above The Line (ATL) marketing are the use of mass media in order to help promote brands and reach to a larger customer. This includes television and billboards. The cost associated with ATL are normally high as it helps to strengthens the brand and give a more significant ‘first impressions' on what the brand is about. In the hotel industry, marketing team normally uses ATL in terms of billboard and Television commercials. Both billboards and television commercial have a mass appeal and reaches a widespread amount if audience that helps achieve awareness amongst consumers and creating brand recall (STB, 2017).

In Singapore, ATL marketing can be effective in the Mass Rapid Transit (MRT) and the public busses. This is because there are a huge number of Singaporeans who uses public transports to commute in their daily schedule. So, this gives a huge opportunity for marketing teams in the hotel industry to promote their hotel business in regards with the ever-changing external environment. In terms of billboard advertising in public transportations, businesses can reach more people which in return is considered as a cheaper way of marketing in comparison with other mass media (Bowie and Buttle, 2004). With billboards, there are guaranteed to be viewers and as the message is conveyed more than twice, it will become more engraved in customer memories that in return will make them come and find the company. Billboards are one of the only mass marketing media that allows businesses to promote their business 24 hours a day, non-stop until the advertisement is being taken down and the billboard advertisement will have constant brand exposure (STB, 2017).

In terms of television advertisements, the message that marketing teams wants to convey needs to be brief and simple that can attract the attention span of customers. This is because television advertisements normally only last for around 30 seconds and advertisers need to find unique and creative ways to promote their brand within the short span of time. Television has always been a way to appeal to a mass type of customer demographics. There will be no limitation in terms of gender and age under television advertisements. With the appropriate combination of text, image and music choices, television advertisements can be used to leverage and attract customers to the business. Using television as a marketing tool can be seen as an advantage in terms of the level of sophistication as compared to other marketing medium. The visual and auditory stimulation provides a powerful tool to enhance the advertising creativity that might give customer a highly first impression towards the brand.

5.2. Below the Line

Below The Line (BTL) marketing refers to a closer to customer marketing strategy. Types of BTL marketing includes expo, magazine advertisements and specified search engine marketing. This advertising type is more specified on localities and is used to promote brands that customers wants to see in real life. Hotel industries uses more BTL marketing tool in terms of magazine advertisements and specified search engines. As for hotel expos, not every hotel will be participated in it unless they are looking for investors in business or investment expos.

One of the biggest advantage of BTL marketing is no doubt the amount of cost needed to perform this marketing strategy. BTL advertisements are not only reasonably priced but it can scaled up or down easily. For instance, a magazine advertisement will normally provide spaces to choose from and the price varies depending on the size that businesses choose. Also, it is definitely easier to convert customers with the BTL marketing methods. With sending promotional emails and specifying search engines' search, marketing teams can track link on link clicks from both email and search engines. BTL marketing also allows for better customer engagement. In the constant change of business environment, reputation has become the critical factor on influencing customers. ATL methods are great in terms of bringing brand name out to the mass market but BTL marketing are more preferable in fostering the actual relationships with potential customers.

2.3. Through the Line

Through The Line (TTL) marketing is the recent marketing tool that has emerged with the presence of technology and social media. This can be a mass advertising that forms a prospect of customer database that can be implemented for direct marketing activities. In other words, it is an integrated approach where company uses both BTL and ATL strategy and combine it into an online advertising platform to reach their customer and generate customer conversions. In terms of TTL marketing strategy, social media is the norm platform that is used. Social media marketing involves haring promotional or branding content on social media channels in order to achieve the desired branding and marketing goals. It includes activities such as uploading texts, images and videos to drive audience engagement (Chaffey, 2012).

Nowadays, social media will be the number one most used application on the daily for potential customers and this provides major advantage for hotels to market and promote their brand. Social media accounts such as Youtube, Instagram and Facebook are the most commonly used among hotel companies. According to Séren et.al. (2013, 31),35% of Finnish companies had a clear social media strategy (See Appendix 1.1 ).Based on these social media accounts they not only able to exploit it as a marketing tool, but it can also be as a marketing survey on the likes and dislike of customers. Old fashion way of complaining through letters are not as popular as they were as customers now are more shifting to social medias to create buzz or hype on the things that they are not pleased with. With this information, it is easier for the hotel businesses to improve the services that they seem are lacking.

Before posting anything on social medias, marketing teams must know the goals and target customers that they want to achieve with the post. Every post is considered as money and brand reputation. Posting something without a social strategy in mind is seem to be wandering around without a map as guidance. Therefore, it is important to know the target audience and goals of each and every social media post as it might affect negatively towards the brand reputation.

Apart from using businesses own social media accounts, they can also pay social media influencers to post things promoting them as a part of marketing tools. Social media influencers are social media users whom are widely known and they have their own specific audience that they can help reach for businesses. Before paying or hiring any social media influencers, marketing team needs to learn and analyse the audience demographics the social media influencers have and see if it is at their desired target customers.

Some of the benefits in using TTL marketing with social media is the increase in web traffic. As the social media account being widely known, customers will have the curiosity to find out more about the brand and therefore will lead them to go to the search engine (ie, Google) in attempt to find out more about the brand. This is where the hotel brand experience comes as an important factor. Having a good impression on social media is not enough but the widespread of positivity surrounding the brand name in customer experience are also crucial (Bowie and Buttle, 2004). As discussed above under Technological Factor, almost every customer have a smartphone in their pocket and with evolving technology that is happening everything is at the tip of everyone's finger. Hence, it is always important to be creating a good brand identity and positive brand corporation.

Using social media can also help keep track on competitors as they can provide valuable data for main keyword researches and other social media insights. Businesses can look and compare the things they are doing to what their competitors are currently doing and this are at great disposal to use in order to keep up with the intense amount of rivalry that is happening in Singapore's hotel industry.

Apart from that, marketing teams can measure the success of their social media marketing strategy by viewing the analytics and insights to analyse the most successful social media strategy that they have undertaken and to determine which strategies are better off left abandoned. Analysing the analytics and insights of social media can also help determine the number and demographics of customer reached (Bowie and Buttle, 2004). If the demographics such as gender and age are not the ones that they were aiming for, then they will have to look at other strategies that may attract more to their desired customers.

A stronger web presence should be the primary goal of every social media marketing campaign to boast the number of visitors to the company's websites. According to Barefoot and Szabo (2010), there is more customers coming which generates more income. This is vital for hotel industry to keep up in ensuring that visitors will be able to access even outside of Singapore and able to book room from different sites such booking.com and hotel own web page.

There are a lot of marketing tools that are at the disposal of marketing teams in the hotel industry.

Example Google Hotel Ads, the ever growing cost of acquiring a new user over the Internet (general expenses for advertising online will grow next year by approx. 7.2%) or the next changes in the Google search engine. CRM systems and the effective use of data on the client, e-mails adapted to the client's travel stage or efficient communication via social media are still the basis for building relations, even though their end was announced many times (Dragan, 2016).

Being a company in a very competitive market with a high amount of product substitute, it is important for marketing teams to exploit all marketing platforms that are at their disposal as a factor to also keep up with the competitors. The success of a marketing strategy strongly depends on the effectiveness levels of communication because no matter how good the product or service is, the message needs to be clearly communicated (Bowie and Buttle, 2004). All marketing tools will be able to provide best result because it helps creates both awareness amongst mass customer and also builds relationship that helps influence the purchasing decisions. Therefore, to say that one is more beneficial than the other would be inattentive.

6.0. Conclusion

With Singapore gearing as a smart nation, it is important to recognize the needs of customer at different stages and provide them with customized experience. In practice, material and extra mile services provided to users (dynamic content) and the advertising form, provides the greatest effect and brings the desired emotions and bring back customer retention in the hotels industry.

Internet of things (IoT) which normally associated with the idea of the Smart Hotel. In fact, the era of IoT is only entering the mainstream phase, and its rapid evolution is the matter of the nearest several years. It is worth noting the possibility to associate this technological trend to the new marketing possibilities it brings. Today people decide to choose a specific hotel from among the wide range of competing hotels, are more willing to promote it among their friends and demonstrate loyalty which makes it possible to reduce the sales costs in the future.

Corporate social responsibility (CSR in the context of hotel not only impacted on employees, customers, local community, the natural environment but a global platform evolved the hotel industry to look at various factors such as reduction of cost, attracting the most talented candidates, meeting the needs of conscious customers, and building brand credibility and customers loyalty .a strategy is the condition for the functioning of automation both in sales and in marketing. To achieve this the pest factors will be taken into great consideration on how this will overall impact certain industry and help to strategies the use of correct marketing tool and initiatives to boast the overall productivity of the industry.

7.0. Recommendation

With Singapore investing on smart technology, it is important that the hotel industry look into the construction of the full marketing plan and leverage on their advance technology platform such as ensuring that a good social media marketing mix for the industry. The social media platforms cannot be treated as a separate from the whole marketing plan. This has to be embedded in the in social media marketing and strategy. Social media can only be effective as a part of the general marketing/business strategy for the company. The internet has revolutionized the world and marketing and has made this the hospitality and tourism industry Singapore went beyond boundary.

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