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Holiday Inn Worldwide

Introduction

Marketing is a social process that entails an economic activity and a compilation of physical tasks (Preston, 1967. 1). It actually engaged in the buying, selling, and trade of goods and services and the additional activities that make these exchanges possible. Marketing is one factor that helps retailing to adjust and adapt to the changing needs of the environment. However, in order to adapt to the changing market, strategies are very important. Greco and Michman (1995) mention the strategies in a changing market as follows: foresee the changing market divisions; to position new stores in new shopping centers as well as locate in new markets; improvement of store brands; modernization of the stores; to develop strong store strategies; objectives must be clearly defined; target-precise market segments; and the promoting innovations. On the other hand, they also cited the mistakes that most retailers commit. This is very important in determining the factors that makes a business fail. First is the disappearance from its basic fundamentals; and then by carelessly allowing the image of the store to tarnish; and of course the lack of continued innovation which is very important; “all things to all people”; the incapacity to shift strategies; and by ignoring the forces behind competitions. All in all we can see that innovations are very important in all businesses whether it caters to retailing or that of a bigger organization.

There are many aspects of the market that must be taken into consideration in order to look into the possible effects of these market aspects in the possible success or failure of an organization. An illustration of this is the market environment. The contemplation on the behavior of the market environment is considered a maxim by firms. The business press is gorged with stories of firms that are successful because they are flexible in responding to the changes that buffet them. Marketing researchers coined the term “market orientation” to throw more light on the nexus between a firm and its environment, and their findings added empirical evidence to the truism mentioned above. However, much of the work on market orientation has examined this phenomenon in manufacturing contexts, and most studies seem to be to relate the magnitude of a firm’s market orientation to performance. It is possible that firms, facing the repeatedly incompatible demands from stakeholders, may emphasize one aspect of market orientation more than others.

In order to look into the probable success of retail marketing, one must employ Porter’s Five Forces model in order to view the existing condition of the market of the target country, particularly in the industry wherein the product is a part of. Among those to be taken into account includes the buyer’s power, supplier’s power, rivalry among competitors, threat of new entrants, and the threat of substitute products.

Under the consideration of the power of the buyer, it is in this part wherein the company would be able to interpret the vastness or minuteness of the selling public. When this is determined, the company could now decide whether their product would be able to attract an intact customer base, more especially when the product is considered as a commodity among people. This is when the company determines on the significance of influence that they possess over the customers.

To persuade what clients consume, a company has got to commonly dig deeper than simply observing whether they are keen on the product or service offered by the company. A wider gauge of contentment can inform a company how probable customers are to change sides. But approval alone doesn’t tell a business what makes the clientele faithful. Nor does measuring contentment intensity inform a company how vulnerable its clientele are to varying their expenditure arrangements. These deviations frequently come to pass as a consequence of adjustments in their lives, in the company’s products, or in its competitors’ proposals. (Coyles and Gokey, 2002)

Another thing that should be taken into consideration is the power of the suppliers to influence the price of the end product of the company. The suppliers are the ones who provide the raw materials to create the company’s product. It is in this part of the planning process wherein the company could determine the ability of the company to search for suppliers that could offer a more cost-effective means for the end products of the company. The interchangeable and indistinguishable characteristics of the raw materials of the product determine where the bargaining power lies, on the supplier or on the company.

Competitors are always a threat on the company, particularly if the company is considered as a new entrant in the industry. To a certain extent, although the company has released the product and became successful in three states, the company could be considered a new entrant to the foreign scene. It is in this area where the products of every company are considered on the level of differentiation and diversity. Moreover, the presence of a secondary market is also examined in this part of the planning process.

Companies take on competitive analysis to acquire an improved comprehension of their competitors’ assets, potential, and approach (Porter, 1980). Smith et al. (1992) detailed how firms in the airline industry initiate strategies and respond to competitors’ strategies. Smith et al. (1992) representation of the dynamics of strategy exemplifies the significance of discernment competitors. The awareness of resemblances and disparities among rival corporations can significantly have an effect on the types of competitive behaviors in which a company takes on. (Thomas et al., 1993)

As a new entrant on the foreign scene, the company must be able to discern how much power it possesses. This is where the company should look into the possibility of existing national competitors of cutting down their price if they are to defend their market position. Moreover, the company should also look into national regulations regarding new entrants in the national market, particularly those which directly affects the products of the company.

Companies yearning to penetrate markets overshadowed by reputable firms recurrently must conquer an assortment of competitive barriers such as economies of scale, capital requirements, access to distribution channels, product differentiation, switching costs, cost disadvantages independent of scale, and government policy (Porter, 1980). These obstructions elongates the period during which active companies may be able to make use of competitive advantage devoid of laying bare the competitive rivalry or imitation from others (Shepherd & Shanley, 1998).

And lastly, the company should also look into the threat of substitute products. It is in this part of the planning process wherein the company determines the level of importance of their product among consumers in general. The existence of substitute products could undermine the capacity of the company to acquire additional profits.

After all of these aspects are established, the company could easily create courses of action that would be able to take on the challenges of the national market of the chosen country. In this context, we have chosen the possibility of placing the brand of Holiday Inns in the worldwide market. The knowledge of the said market would be able to create a distinctive advantage for the company to market their products in places other than the three states where it initially launched its product lines. What they have to do is to create an aggressive campaign to make their products known to the public. Their knowledge on the environment, particularly on the industry where they dwell in, will help in attracting its target audience.

Background of the Company

Holiday Inn Worldwide had approximately 1700 establishments internationally carries the Holiday Inn Brand. It has six product lines, the Holiday Inn, Holiday Inn Crowne Plaza, Holiday Inn Garden Court, Holiday Inn Express, Holiday Inn Crowne Plaza Resort, And the Holiday Inn Sun Spree Resort. The said brand is the original and core product of the Holiday Inn Worldwide and taken into account the numerous properties owned by the organization. The said brand has been in the forefront of the hotel industry’s middle market as the primary provider of board and lodging worldwide.

Competitor Analysis

Howard Johnson Brand

One of the competitors of Holiday Inn is Howard Johnson. It has four product lines which include Plazas, Hotels, Lodges and HoJo Inns. The Howard Johnson is similarly in the economy sector of the hospitality industry and caters to travelers throughout the United States.

Sheraton and Hilton

These two hotels acquire the parent name of their respective brands in the hospitality industry. The said brand also holds the Sheraton Inns which also caters to the middle class individuals. Although much of this product line of Sheraton and Hilton carries their name, these are normally placed in franchising.

Marriott

The Marriott has three product lines: hotels, suites, and resorts. Under its name, it parents four other brands of hotels and mid-level inns, among them Courtyard and Fairfield. Although these brands are advertised altogether in a regular basis, the reputation of the Marriott as an upscale brand is the primary tool that they use to attract customers.

Background of the Industry

Buyer’s Power

Based on Porter’s five forces analysis, companies in the industry sell to a few large customers/buyers. Likewise, the industry also displays an apparent impracticality for customers/buyers to switch from one source of supply to another. This is reflected by the cost of materials for building the establishments as well as the costs of operations of the hotel. Moreover, the services offered by companies in the industry are essentially interchangeable and indistinguishable. The product could also be considered as a commodity for the hospitality industry since the middle market is the focus of the Holiday Inn brand.

Suppliers’ Power

Many suppliers provide materials such as towels, toiletries, food items, etc, to the industry. Moreover, companies in the industry are not likely to backward-integrate. On the other hand, it could also be posited that the companies in the industry are the primary source of revenues for the suppliers. This makes the competition among suppliers more rigid. Likewise, if material costs get out of line, companies in the industry would be able to have a hard time using a different type of material to produce the product. The industry is also characterized with the quality and costs of materials having a significant impact on the quality and price of the products and services produced by the industry.

Moreover, the materials provided by suppliers are essentially interchangeable and indistinguishable. The materials are essentially commodities. Likewise, in an industry where loyalty is also considered necessary, there is also the possibility for the suppliers to forward-integrate.

Rivalry among Competitors

Companies in the industry considered to be diverse in their history and culture and in how they do business. Moreover, the product/service sold by the industry has low storage costs or is not perishable. Nonetheless, the industry is experiencing fast market growth. The products offered by companies in the industry are essentially interchangeable and indistinguishable. It has also been established that the product provided by the company is a commodity to a major part of its stakeholders. Moreover, it also shows that there are considerable numbers of large competitors that dominate the industry. In the said industry, companies in the industry have high fixed costs and spend a lot of money on plant and equipment. Likewise, production capacity, to be economically feasible, must be done in large, expensive increments. Significant barriers as well hinder companies that want to exit the industry. These include regulations, labor agreements, costs of closing facilities, and the absence of secondary market for assets. In addition, it could also be observed that staying in the industry is of great strategic importance to companies in the industry, probably because they have nowhere else to go.

Threats of New Entrants

The economies of scale play a significant role in the cost of produce the product and service. Companies in the industry have low fixed costs and spend relatively little on plant and equipment. Moreover, competitors in the industry are not likely to cut their price to defend their market position. In an industry experiencing fast market growth, proprietary knowledge, and brand reputation are also considered as barriers for companies entering the industry.

Threat of Substitute Products

The price of substitute products is more expensive. This provides the industry a great following. Moreover, the quality, features and benefits of substitute products are generally lower.

SWOT Analysis

Macro-environmental Factors: Identification of Opportunities and Threats

Opportunities

One of the opportunities that Holiday Inns Worldwide should exploit is Internet growth. Companies are being dragged into worldwide marketing, like it or not. Growth rates are very high, opportunities are obvious. They could utilize the service of the internet to their advantage by placing more convenient transactions like paying and placing reservations online.

Threats

Similarly a number of general circumstances have also served as a threat to the company’s macro-environmental settings. The larger, branded competition is recognizing their niche. They are beginning to compete in their area, recognize their niche.

Micro-environmental Factors: Identification of Strengths and Weaknesses

Strengths

The company’s strength has been instrumental in Holiday Inn Worldwide’s success in the hotel industry. Among these strings is the company’s possession of considerably rapid product development systems which allow them to update their programs promptly as well as allowing new product lines and services to be released to the market. Moreover, majority of their product lines possesses high name recognition which provides the company a strong customer base, both at home and among corporations. With their applications utilized globally, they are thus encouraging standardization and competitive advantage by means of the consequential ease of integration. Similarly, the company has the reputation of being among the largest name recognition for mid-level hotel services globally.

Weaknesses

Unfortunately, there are still areas in the company that still need improvement. To illustrate, the company’s failure to look into the potential of the world wide web in advance have lead them to become among the second rate players in Internet space.

Conclusion and Recommendations

Based on the analysis in the earlier part of the paper, the buyers in the industry could be considered as a very powerful force. Powerful buyers drive down profitability because they bargain for lower prices, demand better product features for the same price, and play one competitor against another. In the context of the current status of the supply chain of company, the influence of the buyers intensifies. One could recommend for the company to target future growth in market segments composed of middle class consumers. They are less likely to bargain on price and will often pay more for less. They have less leverage and fewer options than the large customers everyone is trying to attract. It would also be beneficial for the company to find new ways to differentiate their products and services that have value to the customer. Even if the product is a commodity, there are ways to differentiate it in terms of the services that surround it. Differentiation can occur from the very first time customers becomes aware of their product to the time when they must dispose of it. Moreover, they should also offer additional services or support to customers in exchange for a larger share of their total purchases. It is also deemed necessary for them to develop services that make it easier for them to work with the company as a single source supplier. Holiday Inn Worldwide should also combine a reduction in the buyer overall cost of doing business with the creation of switching costs. For instance, offer a lower price in exchange for a long-term contract. Alternatively, the company should link IT systems to the customers to reduce transaction costs and lock them into to the business. Furthermore, the company should as well focus new growth initiatives on customer segments with the best profit margins. They are less likely to beat the company down on price. They should also consider creating a new distribution channel and figure out ways to disintermediate those in the distribution channel.

Similarly, it has also been established in this paper that the competition in this industry is powerful, not only for the consumers of the industry, but also with regards to the loyalty of suppliers. Competitors can drive down industry profitability by cutting prices or offering more product features for the same price. When rivalry is most intense, competitors often compete head-to-head on price. When competition is disciplined and constrained by industry norms, rivalry is weak. In looking into the profile of Holiday Inns Worldwide it is recommended that where possible, they should minimize their investment in plant and equipment. Moreover it is also recommended that they work to reduce the fixed assets on the balance sheet. They should get rid of outdated facilities and equipment. In addition, Holiday Inns Worldwide should as well help weak competitors exit the industry. The company should make it easy for them to get out by buying up their assets even if they have little value. The value comes in getting them out of the industry and reducing the number of competitors.

New entrants are potential competitors. New entrants are a powerful force in the industry. The easier it is for new companies to enter the industry the greater the competition in the industry. New entrants will often attempt to break into the industry with low prices, innovative products, or new features and benefits. When it is difficult to enter an industry, the threats of new entrants is low. In this light, it is advisable for the company to work with regulatory bodies to establish industry policies and procedures. The more stringent the requirements, the lower the likelihood of new companies entering the industry; the cost will be too high. This is one time that industry regulations are good business. Similarly, the company should go after new entrants aggressively. Moreover, they must defend its market and cut the price if necessary. The company should make sure that they are adding more value than the new entrants. Moreover, they should as well form partnerships with key distributors to keep new entrants out of the market. Give key suppliers price breaks or provide supplemental services in exchange for exclusive distribution rights. Holiday Inns Worldwide should make sure the company are growing faster than the industry. They should make new entrants fight for every customer. They should not also become complacent and assume that there’s enough business for everyone.

Hospitality in business is an important aspect as this enables the establishment of interconnectedness between clients and the operation. Due to the integration of various hospitality efforts, businesses are able to generate additional value and promote customer satisfaction and loyalty. Hospitality management is indeed a growing industry as evidenced by its huge market segments and workforce coverage.

The hospitality industry is a different marketing service from manufactured products primarily because this type of business was able to integrate the provision of both products and services. The efficacy of the industry may be beneficial in pleasing and servicing various customers, However as this business caters to both products and services, mismanagement may cause numerous difficulties. Moreover, the skills needed for providing products and services must be incorporated so as to meet the needs and demands of the customers. Intensive education and training, planning, organizing and directing and balancing are among the most important elements for the success of the industry.

Without the customers, the hospitality industry will not work. In this kind of business the role of the customers is valuable as they serve as the source of revenue for the continuous operation of the business. Furthermore, as the customers are directly involved in service delivery, they are responsible for providing the judgment on the quality of service they receive. This judgment is essential in assessing the capability of the business as quality service providers. In conclusion, the hospitality industry is different from manufactured products as it involves not only the mere act of providing and distributing physical item. It also involves the use of interpersonal skills that enhances customer value and experience.

References

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