Peninsula Hotel Group: Case Study
I. Executive Summary
Marketing is one of the most important processes in any business, because it can be considered as an imaginary line which connects the customers and the firm. In that case, it will be important to ensure that it is properly planned and implemented. The Peninsula Hotel Groups is considered as one of the most well-known name in the hotel and hospitality industry in the world, not only to its survival in the industry for a long time, but also because of its quality and being classic.
This paper will focus on analyzing the different marketing processes of Peninsula hotel which focuses on the corporate, customers and competitors marketing strategies. It evaluates the current effectiveness of the said marketing strategies, at the same time, talk about the connections of the different marketing theories behind the process of strategic marketing planning by using 2 marketing models, which are: marketing strategy triangle and Porter’s generic strategies.
The study focus on the current international or global marketing strategies of the company which pertains on its application of technologies such as the Internet and its website which enables the customers to retrieve and access information regarding the hotels, at the same time, enables them to reserve and book their stays. It also focus on the segmentation process which enables the hotels to focus on the specific needs of each and every groups of their common and possible customers such as VIP, business, family, honeymoon, adult and children. The said factor helps the company to have a strong relationship with their customers. In addition, this study also focuses on the company structure, and its connection to the marketing process of the hotels. It shows that the hotels uses an integrated marketing communications which enables one department or individual to plan, manage and control the different marketing resources, which help the group to have consistent standards and results.
In the end of the paper, the author gives the two most important opportunities which can be taken advantage of the company, in order to gain competitive advantage and maintain their position in the industry and market: mobile marketing and offering affordable services. The mobile marketing can help the company to gain more customers, due to the fact that the number of mobile Internet users is increasing and helps to improve and maintain their strong connection and relationship to their loyal customers. At the same time, by offering affordable room services, the hotels will be able to cope with the current global financial crisis and growing number of Mainland Chinese visitors.
II. Table of Contents
TOC \o “1-3″ \h \z \u I. Executive Summary
II. Table of Contents
III. Background of the Company
IV. Marketing Effectiveness Evaluation
A. Customer Philosophy
B. Integrated Marketing Organization
C. Adequate Marketing Information
D. Strategic Orientation
E. Operational Efficiency
V. Strategic Marketing Planning and Marketing Strategy
A. The Boston Consulting Group Approach (BCG Matrix)
B. Porter’s 5 Forces Analysis
C. Ansoff’s Product/Market Matrix
VI. Specific Growth Opportunities
VII. References
VIII. Appendices
A. BCG Matrix Analysis
B. Porter’s 5 Forces Analysis
C. Ansoff’s Product/Market Matrix
Table of Figures
TOC \h \z \c “Figure” Figure 1 BCG Matrix
Figure 2 Porter’s Five Forces Analysis
Figure 3 Ansoff’s Product/Market Growth Matrix
III. Background of the Company
The Peninsula Hotel Group is a subsidiary of the Hong Kong and Shanghai Hotels, Ltd. (HSH), a holding company that is engaged in the ownership and management of prestigious hotel, commercial and residential properties in key destinations in Asia and the USA (HSH 2005). In 1928, the original Peninsula was built in Hong Kong, and majority of its shares was acquired by the Kadoorie family, and still run by their descendants nowadays. The Grande Dame is he only surviving historic hotel in the city. Later on, the Kadoorie family built up a first-class group by acquisition and development in Hong Kong, Shanghai, Peking, and recently in Beijing. As of now, Peninsula Hotels is considered as a brand that is known for its deluxe-plus comfort, with unmatched service, that is represented by 8 properties in Asia and America and soon to be 9th opening in Shanghai (Peninsula Hotel Group 2009). The mission of the group is to set their sights high, their standards higher and aims to always delight their customers, and in many cases, serve the third generation of their loyal guests (Peninsula Hotel Group 2009). The vision of the company focuses on maintaining its unique identity among the leading hotels in the world and operates prestigious luxury properties in other major cities and places in the world (Peninsula Hotel Group 2009).
IV. Marketing Effectiveness Evaluation
In evaluating the effectiveness of marketing initiatives of any company, it is important to focus on 5 factors: customer philosophy, integrated marketing organization, adequate marketing information, strategic orientation and operational efficiency.
A. Customer Philosophy
The first important factor to be considered in terms of effectiveness of marketing efforts is the importance of designing the company in order to serve the needs and demands of the chosen markets. In that case or aspect, it can be said that the company had been successful in focusing on their marketing initiatives, because of the fact that the company had been able to redeveloped and improved the entire structure of the company in order to cater to the different demands and needs of their customers. For example, the expansion of each and every hotel in different parts of the globe was a movement that was done in order to meet the growing demand of their loyal customers. In addition to that, the plan of the group to focus on the different local cultures and qualities of each hotel in respective country enables the customers to experience the culture of the respective country. It can also be seen in the effort of the group to offer 4 unique services such as: hotels, spas, boutiques, together with academy programmes.
Another important factor is the process of developing offerings and marketing plans that will target different segments of the market.
This is because the said process is important aspect together with needs identification and measurement of customer perceptions (Nykiel 2007, p. 282). Aside from that, the idea of dividing up a market into homogeneous segments and targeting each with a distinct product or message is already considered as the heart of marketing theory (Croft 1994, p. 2). The said factor is considered as one of the edges of the group, this is because the company focuses on giving different unique services to different groups, such as business and family. Aside from that, the group also focuses on the different demands of age group: adult and children. For younger guests, the hotel provides car-beds and medley gifts, which include teddy bears etc. Furthermore, the group also offer special treatment for the pet lovers, the pet-friendly hotel offer monogrammed pillows and beds, together with walking services for dogs (Chin 2008). Above all, the company focuses on whole marketing-system view which focuses on the effort and needs of their suppliers, channels, competitors, customers and environment in the process of planning the entire business.
B. Integrated Marketing Organization
The entire marketing process of the group is being managed and controlled by one group and handled by one individual, Ms. Jean Forrest, the General Manager for Marketing. The marketing team is responsible in developing and implementing global marketing strategies for the Peninsula Hotels (Peninsula Hotel Group 2009). In terms of integration the group focuses on integrated marketing communications or IMC. IMC is considered as the process of developing and implementing different forms of persuasive communication programs with the customers and prospects over time. The main goal of IMC is to affect and influence the behavior of the selected audience (Kitchen & de Pelsmacker 2004, p. 6). This can be seen on the effort of the groups in advertising their brand in different prints, such as magazines and newspaper, at the same time, focuses on other media such as television. On the other hand, the company also took advantage of the current development in the field of advertisement, which is the Internet. This can be seen on the effort of the group in placing ads in different websites, which are connected with their line of business, at the same time, launch and maintain their own website, which shows the different information and offer a virtual travel in their hotels, at the same time offers Newsletter which help the customers to be more updated with full details on the group’s latest information. Above all, the company also focuses on online booking which enables their customers to book their visit to their hotels in easy and fast manner (Wong 2002).
C. Adequate Marketing Information
Marketing research is considered as one of the most important process in the entire operation of the business, because the data and information gathered from the said process can be used as an initial input in the process of deciding on the different medias and effort to be exerted in the marketing activities. In the case of Peninsula Hotels group, because of the fact that the company is a huge one with different hotels, restaurants and other businesses in other parts of the earth, the company is using external organizations in order to manage the marketing research as well as media buying and planning. Thus, it helps the company to have updated and precise information, which comes from reliable resources.
D. Strategic Orientation
In terms of strategies orientation, the company is connected to an external marketing expert, which enables the company to gather updated and reliable information are the right time, thus, the said information can be used in the process of decision making, which considered it as effective marketing strategy.
E. Operational Efficiency
All of the marketing efforts and strategies of the company are all handled by one department and controlled by the General Manager for marketing. As a result, it enables the company to focus on local and international marketing strategy based on the international or global standards of the groups. The said, centralized control enables the entire management to manage its marketing resources, at the same time, focus on the development and innovation.
V. Strategic Marketing Planning and Marketing Strategy A. The Boston Consulting Group Approach (BCG Matrix)
There are 9 important business units for the Peninsula Hotels, which are grouped according to the city or country that the specific hotel is located: Hong Kong, Chicago, New York, Beverly Hills, Tokyo, Bangkok, Beijing, Manila and Shanghai.
Figure SEQ Figure \* ARABIC 1 BCG Matrix
Figure 1 shows the BCG matrix analysis of the 9 business units of the Peninsula Hotels that is based on the financial report of the company in 2008.
1) Cash Cow – a business unit that has a large market share in a mature and slow growing industry. Thus, it requires a little investment and generates cash that can be used in other business units (QuickMBA 2007). Manila is the only business unit that was included in the said category. This is because Peninsula Hotel is considered as one of the most prominent and famous hotels in the city. Above all, one of the most important aspects to be considered is the number of competitors in the city.
2) Star – a business unit that has a large market share in a fast growing industry. This business unit generates cash, however, due to the rapid growth of the market, they require investment in order maintain the lead of a specific company (QuickMBA 2007). Hong Kong and Beijing are the two business units which included in the said category. The Peninsula is considered as one of the oldest and classic hotels in the world, particularly in Hong Kong and Beijing. Because of that, the hotel had been able to gain competitive advantage, in terms of image towards the Chinese and foreign visitors. However, because of the growing economy of the said cities, it had resulted to the growing number of players in the industry, thus pushed Peninsula Hong Kong and Beijing to focus on different strategic plan and implementation that will maintain their competitive advantage.
3) Question Mark or Problem Child – a business unit that has a small market share in a high growth market. A problem child requires resources in order to grow market share, however, the fact if they will be successful and become stars is not sure (QuickMBA 2007). Tokyo, Bangkok and Shanghai are the three business units that were included in the said category. In Bangkok, the Peninsula hotel has a small share in the market because of the extensive competition, primarily from the local players in the city. The said situation is the same in Shanghai. On the other hand, the Tokyo Peninsula hotel was included in the said category because; the hotel was one of the newly developed hotels of the group.
4) Dog - a business unit that has a small market share in a mature industry. Chicago, New York and Beverly Hills are three of business units that belong to the said category. The reason behind the said analysis is because of the fact that Chicago, New York and Beverly Hills are considered as three of the most prominent cities in the world. Thus, there are different huge companies that have already started their operations in there. Although it is important to consider that a dog may not required substantial cast, it is connected to the capital that could be better be deployed elsewhere, however in the case of the Peninsula Chicago and Beverly Hills, it is considered as strategic purpose of the group in order to introduce their brand in the West.
B. Porter’s 5 Forces Analysis
Figure SEQ Figure \* ARABIC 2 Porter’s Five Forces Analysis
Figure 2 shows the Porter’s 5 Forces analysis of Peninsula Hotel Group.
1) Supplier Power – or known as the bargaining power of suppliers tackles on how strong the position of sellers, thus focus on the existence of many potential suppliers which exists in the industry (12Manage 2009). In terms of the case of Peninsula group, the supplier has a moderate power because of the fact that there is huge number of suppliers in the hotel industry in the world. Aside from that, products and services by the different suppliers are almost similar, that gives the company the freedom to substitute.
2) Buyer Power – or known as the bargaining power of the customers or buyer focus on the idea about how strong is the position of the buyers as well as the possibility of working together in ordering large volumes of products (12Manage 2009). It is important to consider that there are different factors that must be considered in analyzing the bargaining power of the buyer. First is that the population of the buyers in the industry, the bigger the number of the buyers or customers, the lesser the influence or power of the buyer, because of the fact that the group will be able to focus or target more number of buyers. On the other hand, it is important to focus on differentiation and standardization of the products, in the case of the group, there are different direct and indirect competitors in the hospitality industry, and thus it enables the buyers to have the ability to substitute. However, the edge of the group focuses on the high demand for quality and services.
3) Competitive Rivalry – the rivalry among the existing players in the hotel industry in the world is strong. This is because of the growing number of players at the same time, low differentiation of the products and services that are being offered. However, the main advantage of the group focuses on the loyalty of the customers, at the same time, the image that was held by its brand for a long time.
4) Threat of Substitution – focus on the how easy a given product or service can be substitute, especially when it was made cheaper (12Manage 2009). In the case of the company, the threat of substitution is somewhat high, because of the presence of some cross-product substation such as cheap motels and houses for rent.
5) Threat of New Entry – pertains on how easy or difficult it is for a new entrant to start competing. In the case of the group, it will be hard for the new entrant to enter the industry because it is expensive to enter the hotel industry, due to high initial capitals, at the same time; experience is needed, together with the presence of some economies of scale. The group can also create some cost advantage, because it was already in the business for the long time, thus it some control over its pricing. Above all, the group has an advantage in terms of image, loyalty of the customers and access to different vital technologies and skills.
C. Ansoff’s Product/Market Matrix
Ansoff’s Product/Market Growth Matrix suggest that an attempt of a given business to grown is dependent on whether a markets new or existing products in a new or existing markets.
Figure SEQ Figure \* ARABIC 3 Ansoff’s Product/Market Growth Matrix
Source: (Tutor2u 2009)
The entire growth strategies of the group focus on the three strategies suggested by Ansoff: market penetration, market development and product development.
1) Market Penetration – is the growth strategy which enables the business to focus on the process of selling existing products into the existing market. It focuses on the objective to maintain and even increase the market share of the company (Tutor2u 2009). This can be seen on the effort of the company on its pricing strategies, advertising and sales promotion. This can be seen on the effort of the company in applying technologies or Information Systems in their entire process, in order to ensure that they are giving fast and efficient services towards the customers.
2) Market Development – this strategy focus on the different actions of the business that seeks to sell its existing products into a new market. This strategies focuses on establishing or building new hotels in different cities or parts of the globe. In late 2009, the Peninsula Shanghai will be completely opened. Above all, in July 2008, the group entered into a non-legally binding heads of agreement with the Qatari Diar Real State Investment Company for the proposed establishments of hotel in Paris, France (The Hong Kong and Shanghai Hotels, Limited 2008).
3) Product Development – pertains on the different growth strategies which aim to introduce new products in an existing market. The Peninsula Hotel Group focuses on the different strategies which improve its existing assets, by introducing new concepts or improving facilities that will help to enhance the brand image and competitiveness of the hotels. In 2008, the hotel in Beijing installed a new spa, swimming pool and fitness center, at the same time, welcomed a new fleet of Rolls-Royces and BMWs during the time for the Beijing Olympics. In addition, the Peninsula New York revitalized its rooftop bar by the process of creating a new concept that was called the Salon de Ning, it is also in an extensive spa, gym and pool renovation. Furthermore, the Peninsula Beverly Hills renovated its roof terrace and swimming pool deck, and was reopened in April 2008. In Manila, guestrooms in the Ayala Tower were renovated, while the Salon de Ning was created in the Peninsula Hong Kong (The Hong Kong and Shanghai Hotels, Limited 2008).
VI. Specific Growth Opportunities
There are different opportunities that are available for the company, in order to ensure their success in the future. One of this is the advent of mobile marketing, or the process of advertising and selling their products and services over the Mobile Internet. Mobile Internet has a great impact on the growth of any e-business because it helps to add the number of online users, or the possible customers for online businesses. This is because it allows users to access the Internet by using mobile phones and other handheld gadgets (Executive Standard Ltd UK 2008). In the US alone, the number of unique gadgets that are using the mobile broadband had increased by 154%, from 854,000 in 2006 to 2,168,000 in 2007 (comScore Inc. 2008).
In that case, it will be important for the group to focus on considering the mobile Internet users in designing and implementing their marketing strategies. Thus, the group must design and launch a website that can be browsed and navigated by using any mobile phone. The said website must detect what type of mobile phone is accessing it, and can display its content in the right screen size, so that, it will be easily navigated regardless of the model and brand of cell phone being used by the visitor/customer. The said mobile site must contains the same type of content and information contained in the traditional website of the hotels, but its content must have been optimized in order to be viewed and displayed on a mobile phone.
By doing that, the customer will be able to leave messages and enquiry at the same time enables them to book and reserve their desired services, products and request in fast and more efficient manner (eCornell 2009).
Aside from that, another important factor to be considered is the different factors that can affect the preferences of the customers. As of now the world is facing global financial crisis, and this can affect the travel and tour activities of different tourists and visitors, or push them to look for alternative and less costly hotels in order to save money. In Hong Kong alone, majority of the travelers are from Mainland China, and they are very price sensitive when it comes to hotel accommodation and food, because they tend to spend most of their money in different high tech and electronic gadgets. It will be important for the group to focus on the said growing number of market, by renovating some structure of the hotels that will enable the hotels to offer lower rates of stays in the hotel. However, the company must make sure that it will still focus on its premium products and services, due to the fact that, the number of business travelers, particularly in Hong Kong, Manila and other major cities, where in their hotels are located is increasing.
Above all, the group must focus on continued innovation in terms of applying technologies in their processes which include their application of Information Technology, together with the different technological services to there customers.
Conclusion and Summary
Hotel and hospitality industry is considered as one of the industries or sectors in the world that is in great need of intensive marketing planning and implementation in the world, because each and every business in this industry has the power to become global. Aside from that, there are also different technologies that are emerging, not only in the process of introducing a specific hotel, resort or restaurants to the customers, but also the process of selling them. The Internet is considered as one of the most important innovations which lead to the current most used marketing strategies, and that is to focus on the customer relationship or connection.
Peninsula Hotels group is considered as one of the most prominent hotel brand name, not only in Asia but around the world. It has a rich culture which can be rooted in 1928, and as of now, the group continues to shine and conquers the world. The secret behind the success is the process of implementing their different strategies, that mainly focus on product differentiation or offering unique and innovative products to their customers that cannot be acquired or availed from other competitors. As a result, the company focuses on the process of market segmentation which pertains on the process of grouping its customers into different classifications which enables them to focus on the individual demands and needs. It can be seen on the effort of the hotels to offer different types of room such as VIP, business, family and honeymoon suites. Aside from that, the hotels also focus on age differences in preferences for the room design and styles, by offering room for adults and children. In L.A., the hotel gives importance on the behavior of their customers towards their pets, thus, the hotel offers special services for the pet owners customers such as monogrammed pillows and beds, walking services and room-service menu. The said marketing strategy does not only focus on the demand of the customers, but also focuses on the different environmental and political factors in the said place. This is because of the fact that, in the United States, animals have equal rights as humans.
In addition, the hotels also focus on the integration of marketing communication. The main advantage of the said approach is that it enables the entire group to focus on the process of managing their marketing resources, because it is being controlled, managed and handled by one individual.
On the other hand, there are different opportunities that can be used by the hotels in order to ensure their success in the future. First is the growing popularity of mobile marketing, because of the growing number of mobile Internet. The said channel can help the hotels to reach more markets or possible customers. Furthermore, the issue of global financial crisis and the growing number of Mainland Chinese visitors in China and other parts of the globe must be considered in the process of pricing and room, services and products innovation. The said action is to ensure that the hotels will be able to meet the demands and needs of the growing number of populations.
VII. References
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VIII. Appendices A. BCG Matrix Analysis
Those companies that are large enough in order to be organized into strategic business units are facing the problems regarding the process of allocating the different resources among its units. During early 1970’s, the Boston Consulting Group had developed a model that was used in order to manage an portfolio of different business units or major product lines. As a result, the BCG growth-share matrix enables to show the different business units on a graph of the market growth rate versus market share that are connected to the competitors (QuickMBA 2007).
B. Porter’s 5 Forces Analysis
The Porter’s 5 Forces is considered as a simple but powerful tool that is used and applied in order to understand where the power lies in the situation of a business. This help to understand both the strength of the current position of the company, at the same time, look the strength of the position that a firm wants to move into (MindTools 2009).
C. Ansoff’s Product/Market Matrix
Ansoff’s Product/Market Matrix is a marketing tool that was first published in the Harvard Business Review (1957) in the article known as the Strategic for Diversification. After that, it was used by the marketers who have the objectives for growth. Thus, it helps to achieve different objectives (Marketing Teacher 2009).
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