INTRODUCTION
According to Kotler (1971) marketing is as a cause by which organizations creates gains for customers, and as a result cage a strong consumer intelligence which in turn generates value from the consumer to the organization. Kotler also said there is a social course of marketing through which groups and singles get what they want and need through a set-up, by giving and openly swapping services and goods that has gains to each other.
Former CEO of Coca-Cola Sergio Zyman also (The end of marketing as we know it 2000) said, the main reason for marketing is to have more people to buy more products at a frequent pace at a higher price. Furthermore, American Marketing Association in July 2013 also approved its official definition for marketing in a similar context.
On the other hand strategic marketing seems to gets a bit further, Bradley, F. (2003) describe Strategic marketing as the strategy consisting of an internally integrated but externally fixated on a set of preferences about the organisation, addressing its clients in the context of a competitive environment.
In this report I shall carry out an external appraisal analysis; critically evaluate and analyse Onefinestay’s strategic marketing plan to succeed in the two new cities.
MARKETING ENVIRONMENT ANALYSIS
The cause through which strategists monitor the environmental factors to determine opportunities and threats of the business is what is termed as Environmental analysis. It is a tool that strategically identifies inclusively the internal and external elements, which can have an impact on the firm’s performance. The scrutiny involves assessing the levels of threat or opportunities that might impact the organisation and its operation. These appraisals are then used to assist with decision-making actions.
Morello, G. (1993) said the logic behind marketing plans needing an environmental scrutiny is because marketing is an open arrangement and therefore parts of that arrangements can be unforeseen when collaborating with the organisational environment. The Marketing situation hangs on two separate elements, the internal element which changes from within the firm and the external element which changes externally to the firm which sort of seems to support Morello’s definition.
Although analysing the external element is important for corporate success, it is not complete if not supported by an in-depth scrutiny of the internal element of the organisation. The internal environment consist of all parts that are endogenous to the organisation, which are influenced to a great extent and totally controlled by the firm.
External environment includes all factors which are outside the control of the organisation but renders opportunities or threats to the organisation while the internal environment provides strength or weakness within the control of the organisation.
Different tools such as SWOT, PESTEL, ETOP AND TOWS has been developed by expects to perform environment appraisal of organisations. For the purpose of this report, I will focus on SWOT for internal analysis and PESTEL for external analysis.
Swot
The objective of using SWOT Analysis in this report is to help identify Onefinestay strengths and weaknesses, the threats and opportunities they face in the marketplace to help them know their position or market share in the market place. Appendix 1.
Pestel
It is a strategic analytical tool that stands for political, economic, social, technological, environmental and legal factors that have or influences the organisation’s operation. (appendix2)
IDENTIFICATION OF THE TWO NEW MARKETS
I have chosen Edinburgh and Manchester as the two new cities for the expansion of Onefinestay for the reasons displayed in appendix 3, which is not exhaustive.
CUSTOMER DRIVEN MARKETING STRATEGYAND MARKETING MIX
Customers Segmentation, Targeting and Positioning.
The marketing strategy that will be used for this work is the STP (segmentation, targeting, and positioning) strategy. The STP cause is an essential concept in the study and application of marketing because it does demonstrate the link between an overall market and the way the organisation decides to enter into competition in that market.
STP process will attempt to pick its market segments, direct marketing initiatives at the segments which the marketers are confident that their business can serve better than their competitors, and also how to position their product offering in order to attract the targeted segments.
Segmentation
As a result of detailed study on customer profiles, Creswell managed to identify 4 consumer-use groupings: family, prestige, explore and work which are suitable for these two new markets.
Targeting
Marketers have varied views on the criteria that should be used in making targeting decisions, however most would agree that the most appealing targets are those segments that:
- Have active sales and promising gain
- Are less costly to reach with marketing efforts
- Are under served by little or weak competitors,
- Have desires and needs that your organisation is best equipped with the resource to satisfy.
Targeting in Edinburgh
Using the information above on statistical data, it is advisable to target more family and explore segments as they are more likely to be attracted by touristic attractions and festivals as well as the shopping centres.
According to Etag (Edinburgh Tourism Action Group), 76% of domestic visitors came to Edinburgh for family and holiday reasons while only 18% came for business purposes. A similar trend was shown for international visitors where family and holiday visitors had 85% and 12% only for business.
The work segment could be ranked 2nd in this marketing strategy as although the city also attracts business visitors, but they only account for 18% and 12% respectively from UK and abroad. However, as the business sector is growing significantly in Edinburgh and companies are recovering from the 2008 credit crunch and Brexit is looming, a close eye needs to be kept to monitor business visitors trend and react accordingly when the proportion improves so that more marketing resources is allocated to this market to attract business travellers.
Five stars and luxurious hotels only account for 7% in Edinburgh with the lowest occupancy rate, it could be predicted that OnefineStay Prestige segment will not be as great as the other segment in the city because there is only few visitors here who are prepared to spend more to have a luxurious experience, this could be a challenge for the marketing team.
Targeting in Manchester
Office of National Statistics identified that 31% of visitors between 2010 and 2015 came to Manchester for business reasons while 32% and 22% came for respectively holiday and family and friend visits. based on the information above, the explore and family segments should be Onefinestay’s first priority for marketing as they account for 54% of Manchester occupancy rate in the last 6 years and even in 2015.
However, work segment should directly come next as the statistics shows that a third of visitors come for business reasons which is the same as for holiday only reasons.
The high percentage of business visitors in Manchester can be attributed to the fact that the city is the 2nd business centre in the U.K after London therefore attracting business travellers both domestic and international. Hence, targeting this segment could have huge potential growth for the company as the city itself invest more to attract local and international companies and visitors.
As marketing resources are limited, once the business has sufficiently targeted the 3 segments above, then they can apply the remaining means to explore the prestige segment as a fraction of holiday or work visitors may be ready to pay more to have a luxury experience.
POSITIONING
Positioning in Edinburgh
Although in other markets, Onefinestay has positioned itself as a high-end holiday accommodation provider, however, based on the targeted segments above It will be more reasonable to position Onefinestay as a provider of upper mid-class holiday accommodation, offering services above 3 and 4 stars hotels standards. This positioning will enable Onefinestay to compete and have a share of the 85% of the market share of 3 and 4 stars hotels in the city.
This high market share of 3 and 4 stars hotels is an indication that an important amount of visitors in the city are between average and high net worth guests therefore this positioning will help the company to be more attractive as it will have a large majority of potential guests while maintaining the Onefinestay traditional high-end qualities.
In comparison to competitors, OnefineStay will still be seen by people as a high-end holiday accommodation provider if it keeps its original service high standards applied when it comes to guest and host satisfactions. The strategy and objective here is to target the biggest customer group (3 and 4 stars guests) and give them a taste of the upper scale services provided by Onefinestay and transform them into lovers of high-end vacation rental option and then potentially put prices up in the future when they have trusted the brand.
Furthermore, as Onefinestay operates 2-sided market place, it is worth mentioning that the high-end house quality sought by the management in big cities where the company is already established, with an average house price of £2.5m, will be difficult to be found in Edinburgh where the average house price is £271k compared to £500k (Zoopla.com) in London £600k (dnainfo.com) in New York.
Therefore, it will make more sense to go for a slightly lower positioning in Edinburgh while still keeping the upscale values of Onefinestay positioning in Manchester
Looking at the statistical data from the AMPM Hotel Data intelligence for 2015, the report shows a market share of 17% and 19% for 3 and 4 stars hotels respectively while the budget hotels come first with 28%. The 5 stars hotels come last as they have only 2% of market share.
To maintain the brand and the values of Onefinestay, it will not be advisable to compete against budget despite them serving the majority of Manchester visitors. Therefore as an upscale holiday accommodation provider, the company should position as a provider of high-end holiday accommodation provider beating standards of 3 and 4 stars hotels in Manchester. The uniqueness of the technology and customer service standards provided in the major city will still be applied in Manchester to uphold the Onefinestay branding and reputations.
In this position, the business will potentially attract a high number of guests who normally go for 3, 4 and 5 stars hotels or use other holiday accommodations in the sharing economy because of the quality of customer service and unprecedented experience promises that Onefinestay has as standards to all of its guests.
DIFFERENTIATED MARKETING MIX
A differentiated marketing strategy is when a company creates campaigns that appeal to at least two target market or target segments. This is a necessary approach in the case of Onefinestay as there is a diversity of consumer needs across market segments.
Moreover Kotler (1971) identified Marketing mix as an organised strategic marketing tools; product, price, place and promotion that the organisation links together to help it to achieve its goals at the targeted market. The 4Ps were originally introduced by ………. and has since attracted 3 more Ps which was added by ……..making it 7Ps in some instances.
Application of differentiated marketing mix
Products
It is the goods-and-services the organisation brings to the target market Kotler and Armstrong (2010). In the accommodation industry, it is more about services and facilities that the business is making available for its guests or customers therefore, it is seen as the first of the mix, without product/service, the organisation has nothing to deliver to the targeted guest/ customers.
However, the product offered would need to suit each targeted segment individually in the 2 new markets. For instance in Edinburgh, where the strategy is to first target the Family and Explore segments, the business should provide accommodation that focus on creating casual, individual atmosphere that seem far from the standard hotel ambiance as noted by New York Times. The same business objective could also apply for Manchester as these 2 markets share in common a high number of potential visitors in Family and Explore segments.
Supporting products may also be included as additional service offered to obtain competitive advantage for the organisation by increasing the value of core products and services, for example bilingual customer services and concierge, free business newspaper and magazines for business travellers, and option to buy priority touristic attraction tickets.
Pricing
Pricing strategies that are used by organisations could be seen in four main categories within the framework of Pricing Strategy Matrix: economy, penetration, skimming and premium pricing strategies. Economy pricing comprise selling products of basic features and attributes to customers with small budgets, on the other hand penetration pricing strategy comprise offering high quality products and services in small prices than your competitors with the view to increase your market share. It will not be advisable for Onefinestay to use these pricing strategies as they are both against the company’s values of providing luxury accommodation at a relatively high price for high-end guests.
Moreover, if the business decide to reduce their prices substantially in these 2 new markets, it may have a negative impact on returning guests when they will want to book for accommodations in different cities where the prices start from $250 (£205) per night for a one bedroom house. This may even result in destruction of the brand.
Skimming, price strategy in contrast to penetration pricing where products and services are served at a higher price levels more than the competitor. This strategy will suit both Edinburgh and Manchester for the Family, Explore and Work segments because the company can go for a higher price than 4 and 5 stars hotels as the product offered are of higher and distinct quality. The main rationale behind skimming pricing strategy for these markets and segments include the appetite to associate products and services with exclusiveness and a high quality as offered by Onefinestay.
According to site marketingmanchester.com, the 4 and 5 stars hotel average price in Manchester was £80.90 per night, this has been increased to £102 since 2015 as per the research carried out by Trivago.com and the same source shows £118 for Edinburgh. On the order hand the website airdna.co.uk estimates the average airbnb price at $126 (£103) and $124 (£102) per night for a one bedroom house respectively in Manchester and Edinburgh.
Therefore as the objective in these 2 new markets is to appeal and target the biggest group (3 and 4 stars hotel guests) of visitors and introduce them into the luxury style, while maintaining the company high quality service, the skimming pricing strategy will need to be applied, meaning the price will have to be above the 4-5 stars hotels and airbnd in both cities depending on the fees agreed with the hosts, as they are direct competitors and Onefinestay provide upscale services.
For Prestige Segment in both Cities, premium pricing strategy should apply which, charging high level prices for products and services that are noted to have high quality and additional features that are taken for granted by luxurious hotels as wealthy guests will be provided with unprecedented and local experience.
Pricing system should also allow fluctuation due to seasonal trends. For instance, in Edinburgh there are a great number of festivals in summer therefore demand for accommodation will increase hence the price. In Manchester, there are a number of political parties and business conferences in specific period of the year which may increase the demand of work segments hence the price will need to increase as well.
To maintain and control the relevance and objectivity of this pricing strategy, regular review of competitors pricing and core, facilitating and supporting products will need to be carried out to ensure onefinestay is still basing its pricing strategies on the right information.
Moreover, guests will need to be asked by mean of questionnaires to ensure that the products and services delivered by the business is still in line with the level of satisfactions they receive.
Furthermore, these pricing strategies should consider that the 2 new markets are relatively cheaper in term of vacation accommodation price compared to the existing ones. Therefore it could be advisable to put a lower price range than the usual $250-2500 per night.
Place
Suitable locations may depend on the reasons for the trip, therefore, it is crucial houses are available in different areas to suit all the segments in the new markets. In Edinburgh where, the Family and Explore segments are anticipated to have more potential guests, Onefinestay should ensure that decent houses are available in areas where there are more attractions. According to visitscotland.com most attractions are situated in the city centre but there are also some antique buildings in the Old and New Town of Edinburgh.
This will be the same for Manchester where also, most of attractions and museums are centrally situated therefore, the business should ensure there are houses available for the Family and Explore segments. However some travellers may also want to discover the outskirts of these 2 cities, therefore availability of accommodations outside the city centre will be necessary.
For work segment in both cities, it will be advisable to stay in city centre mainly as that is where most companies are located. Some business travellers will also want to stay close to airports, train stations or highways than near business centres because they may plan to arrive or leave late in the night or very early in the morning
Promotion
The primary attention should be on mass communication through print adverts in trade publications and online. Onefinestay should use search engine optimization programs to increase its online presence in these new markets. The strategy is to increase your outreach and diversify your promotional channels, through Facebook, Google, Yelp, booking.com, Airbnb websites and Hotel Finder.
The marketer should pride its self on Onefinestay brand, leverage social channels, and allocate the budget to get into a higher mobile communication. The marketing messages should aim at targeting audience linked with the company available segments and the uniqueness of the brand…
The company should continue using direct mail campaigns to existing and prospective clients and hosts in the existing and the new markets as a cost effective means of targeted campaigning.
Personal selling in the local market will be an important aspect of the mix in the two new markets so as to build long-term relationships across the local community and generate the trusts needed to sign up more homeowners as the businesses operate in the 2-sided market.
Capitalising on the benefit of testimonies and referrals from past guests and hosts experiences will also help in building trusts and good reputations which will also enable the business to sign up more homeowners and more guests. The Office of National Statistics has revealed that a considerable amount of Manchester visitors from 2010 to 2015 came from Ireland (13%), USA (8%), Germany (8%), Poland (6%) and Spain (6%) while for the same period, Edinburgh visitors most of Edinburgh visitors came from USA (16%), Germany (13%), France (7%), Australia (6%) and Ireland (6%). Therefore using specialized travel agencies in these countries, could ensure that the business attract a good number of these visitors.
CONCLUSION
The framework of the marketing plan is to permit the business to achieve its strategic goals, in by increasing its overall revenue as a result of differentiating products and services from the competitions. The marketing team should see to it that the plan is implemented to the best of their ability and with the highest levels of efficiency and accuracy. All data used should be regularly monitored to allow the business to react promptly, wherever possible, anticipate external changes to the environment and act accordingly. I will further recommend that the points below be considered to achieve success
- Onefinestay should continue to develop ongoing relationships with frequent and new guests.
- Should continue to develop and implement a strong communications plan in both national and international markets.
- Leverage its strength in the local market as a member of the community by supporting local events.
- Continual ongoing staff training and skill development to ensure the highest standards of service.
- Set up a Contingency Plan
Appendix 1