The following sample essay on Sofitel Target Market discusses it in detail, offering basic facts and pros and cons associated with it. To read the essay’s introduction, body and conclusion, scroll down.
Most organisations provide a portfolio of branded products. The accommodation industry is no exception. The Accor and Hyatt companies follow four core components which embody strategic marketing. They segment the market, select the right target, identify the value proposition of that market and communicate that to the target markets.
The portfolio offered by both organisations is evidence of marketing’s evolution towards micro-markets, product based, and value based solutions.
Accor represents the world’s largest hotel and tourism organisation with more than 3500 hotels and resorts in 90 countries with claims to having ‘the most comprehensive choice of hotel styles and locations’. Accor has brands to suit all tastes including the 5 star luxury of the Sofitel and business class of the Novetel, the flexibility of the Mecure, the variety and budget saver accommodation of All Seasons, and the value and convenience of the Ibis and Formule1 brands.
Hyatt encompasses 206 hotels and resorts internationally. Hyatt offers services to the luxury segment of the market. The Hyatt brand includes the 4 star services of the Regency, offering customers ‘opportunities to broaden their horizons and rejuvenate…in rooms designed to reflect the best of the local cultures …with exceptional technology, meeting, and fitness facilities’. The 5 star Grand Hyatt ‘serves culturally rich destinations that attract leisure and business travellers, large scale meetings and conventions.
’ The Park Hyatt represents the companies smaller, 5 star luxury brand catering for the ‘…..discriminating traveller seeking privacy, personalized service and the elegance of a small European hotel’.
According to DSS research, Market Segmentation ‘describes the division of markets into homogeneous groups which respond differently to promotions, communications, advertising and other marketing mix variables. Each segment can be targeted by a different marketing mix because the segments are created to minimise inherent differences between respondents within each segment and maximise differences between each segment.’ Target marketing, according to Kotler et al, is ‘evaluating each market segment’s attractiveness and selecting one or more markets to enter’.
Accor has diversified its portfolio and services a range of market segments. It targets the luxury segment with its Sofitel and Novetel brands, the good service and value segment with its Mecure and Ibis chains, and the budget conscious with its brands Formula 1, Motel 6 and Red Roof Inn.
Hyatt has segmented the luxury end of the market and targets its range of services at the consumer who is willing to pay for the privilege.
Accor and Hyatt target different positions in the market for numerous reasons. Markets are made up of consumers who differ with respect to wants, needs, resources, geographical locations, buying attitudes and practices. This is reflected in the statement that market segmentation is a ‘customer orientated philosophy’. The primary reasons for the segmentation of markets are:
* Easier Marketing – Addressing the needs of smaller groups of customers is easier if they share many characteristics;
* Efficiency – Creates efficient use of marketing resources by focussing on the best segment for companies products encompassing price, product, promotion, and place. Segmentation can ‘avoid sending the wrong message or sending your message to the wrong people’.
* Identifying Niches – provides opportunities in under-served and un-served markets. Helps a company compete for buyers in less contested markets and helps products or services find new buyers.
Micromarketing is a form of target marketing where companies tailor their marketing strategies to the needs and wants of narrowly defined geographic, demographic, psychographic, behavioural, or benefit segments (Kotler et al, 2003). The information within micromarkets is significant to the Hyatt and Accor companies. It is in micromarkets where products, information, and services can be utilised to better satisfy the customers wants.
Micromarketing by Hyatt has led to the introduction of special programs including Hyatt Business Plan, Meeting Connection, and Camp Hyatt, which targets business travellers and parents on holidays.
Accor has utilised micromarketing as a tool to identify niche markets. Accor promotes its Advantage Plus program as the ‘logical choice for the frequent traveller and regular entertainer’. Accor also offers an extensive business travel program which provides the corporate traveller with ‘hotels in central business districts, near international airports, and major corporate parks worldwide’.
Hyatt and Accor consider several factors when targeting segments of the market. They may divide the entire population into 2 broad categories:
* Ultimate consumer – purchasing goods and services for personal use;
* Business users – purchase goods and services to be consumed for business purposes.
The criterion for placement in one of these groups is the customers’ reason for buying. This provides a basis to target holiday makers with resorts in popular holiday destinations and business groups with programs such as Corporate Conference and the Hyatt Business Plan.
Geographically, Hyatt and Accor targets the most popular holiday destinations and business capitals. They are strategically placed in major and secondary cities, as well as airport locations and popular resort destinations.
Hyatt and Accor also uses demographics as a basis for segmenting with consumer’s needs, wants and usage rates varying closely with demographic variables. Income segmentation would be a priority for Hyatt in targeting the luxury end of the market. It has been observed that ‘no single demographic variable captures all the difference among the needs and preferences of the consumer’.
An alternative is occasion segmentation. Hyatt and Accor provides packages not only based on demographics, but also incorporating events in particular cities around the world, as well as packages for personal celebrations.
Segmentation based on benefits identifies a niche market. It provides useful information on the major benefits that people look for in a service, the kind of consumer that looks for each benefit, and the major brands that deliver each benefit.
Once an organisation has segmented the market, it must select one or more as its target. This is the process of choosing a market coverage strategy. An organisation must determine the desirability of each segment of the market. Guidelines have been developed which include:
* Target markets being compatible with the organisations goals and image;
* Resources offered must match the marketing opportunities offered by the specific market segment;
* Organisations must be able to generate a profit;
* Seeking a market where there are the fewest competitors.
According to Kotler et al 2003, an organisation can choose one of three market coverage strategies:
* Undifferentiated Marketing – ignores market segment differences and goes after the whole market with one market offer.
* Differentiated Marketing – target several market segments and design several offers for each.
* Concentrated Marketing – target a large share of one or a few submarkets.
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As is stated by Dibb and Simkin (2001) ‘positioning is the place occupied by a product or brand in a given market as perceived by the target market customers. It is based on the products or brands attributes, standing, quality, the types of users, its strengths and weaknesses, price and value, plus any other memorable characteristics, as perceived by the targeted customers’.
The Hyatt has adopted a concentrated marketing coverage strategy. The company has positioned its brands in the luxury and corporate market with ‘….exceptional technology…sophisticated business and leisure facilities…grand scale refinement…world class standard…sanctuary and luxury’. With this success, the Hyatt has become a leader in the creation and operation of luxury resorts. Hyatt services at the business traveller, with ‘….deluxe hotels with meeting facilities and special services for the business traveller…….operating hotels in major and secondary cities and airport locations’.
In contrast, Accor has adopted a differentiated marketing strategy. Accor has brand name hotels such as the Sofitel and Novetel offering ‘…prestigious hotels and resorts in the worlds most desired business, cultural, and resort destinations’; to the cut price Formule 1 offering ‘consistent motel style accommodation at budget rates in prime transport locations’. Accor also targets corporate travellers with the Novetel brand which is at the ‘forefront of business class hotel brands’.
The internet offers companies such as Hyatt and Accor numerous opportunities. Online advertising being the largest has four distinct advantages:
* Targetability – Focus on customers from specific companies, geographic regions and locations, by time of day, computer platform, browser, personal preferences and actual behaviour.
* Tracking -Track how customers interact with brands and learn what interests current and perspective customers. Internet advertising can measure response to an advertisement which is difficult using traditional advertising
* Deliverability and Flexibility – Advertising delivered in real time 24 hours a day, 7 days a week, 365 days a year. Ads can be launched, updated, or cancelled immediately.
* Interactivity -Engage customers with a product or service more effectively online. Customers interact with the product or service, test it, and if they choose, purchase the product or service.
The most significant advantage to be realised is targetability and contextual marketing. As described by Zeff and Aronson, ‘…various strategies are now readily available to capture the demographics, tastes, and preferences of users to better target content….an advertiser can finally target every ad so that it goes out to just the right prospective customer at precisely the right time’. Contextual Marketing ‘eliminates wasted impressions by only delivering ads to interested persons…and an ad is not considered a nuisance when it is information a person wants’.
Hyatt has found new ways to utilise the internet. In the past, hotel groups have ‘handed over too much control of inventory and pricing to third party online travel agencies….and now they are trying to take back the reins after early shopping patterns have been established’. One article estimated that ‘51% of the 6.3 billion in online bookings made in 2002’ were made by the actual hotel sites, with ‘the remaining 49% going to online travel agents’. Hyatt is one of a number of hotel chains tackling this problem. A year ago they launched Travelweb LLC, there own rival to online booking sites such as Hotels.com, Expedia, and Travelocity.
Marketing’s evolution towards product and value based solutions has highlighted the importance of market segmentation, targeting, and positioning to the travel and accommodation industry. The Accor and Hyatt companies offer a range of brands and services to varying segments of the population. By targeting specific segments in the market, Accor and Hyatt satisfy effectively the specific benefits sought by particular consumers. This also promotes efficient use of resources and helps identify niche markets. Tailor made programs offered by Accor and Hyatt is further evidence of the innovation of micromarketing.
Accor and Hyatt base these micromarkets on the differences in consumers’ needs and wants, resources, demographical and geographical information, buying attitudes and practices. With this, Accor and Hyatt have implemented market strategies to position there brand of services in different market segments. Both companies have taken advantage of what the internet has to offer, especially in the areas of targetability and contextual marketing. As the internet moves beyond the desktop computer and exposes points of contact infinitely more timely and relevant, market segmentation and target marketing will provide companies such as Accor and Hyatt with the platform to continue to satisfy customers and trade profitably in this volatile industry.