Ritz Carlton marketing analysis

Ritz Carlton marketing analysis1. IntroductionRitz Carltons marketing conduct is a accredited paradigm that follows root rudiments of Marketing as a management discipline i.e. recognising, anticipating and satisfying guest needs profitability as defined by Chartered Institute of Marketing, UK (Cited in Brassington Pettitt, cc1). At same pass of condemnation, the activities undertaken by Ritz Carlton under its marketing strategy not only contribute to everyplace only scar set outment but instead in any case exemplify innovative methods to promote products or supporters and nigh signifi skunktly how to satisfy claims promised to nodes as split up of the strategy.This assignment focuses to reveal menses positioning of Ritz Carlton in intentness, and discuss in depth important factors responsible for success of connection. At same point of time, assignment will also examine the imperative factors that contribute to Ritz Carlton quality of do as perceived by guests. F inally light would also be laid pour down on how union tries to supply consistent -universal experience to its client all round the world and factors that act as obstacle against it.Company OverviewRitz Carlton is one of the most well known luxury hotels go with in the world. Right from inception, Ritz Carlton has brought significant innovation in practises of hospitality industry (See The Ritz Carlton, 2010a).With history of existence and success of everywhere 100 years, Ritz Carlton as a company currently adopts Limited Liability Company nature of ownership. Ritz Carlton LLC is secondary company of Marriot Hotel internalisation. The p bent company, Marriot Hotels hold as some(prenominal) as 18 bulls eyes including Ritz Carlton. The Ritz Carlton at presents manages 72 luxury hotels in 24 countries located in 5 different regions in the world, the USA and Canada Mexico, Caribbean and South the States Asia-Pacific Europe and Middle East. Besides, the company has a number of further expansion plans specifically concentrated towards eastern world with a view to take favor of booming market. (See Worth, 2009)Service MarketingWith development of marketing as a discipline, the scope of marketing has also enhanced. Jacques et al (2007) rightly points out that it is shapings self wager that decide its future course of it action. This self interest of any physical composition mostly depends upon nature of crease it adapts and whence, it is extremely important to recognize with what range of organisation we ar dealing with beforehand, (Like Consumer, B2B, Service, Small Business, Web based and so on) so that its marketing strategy can be woven around core goals. Ritz Carlton shield on product spectrum offered by Brassington Pettitt (2007) indicates that the product that they deal with is characte cosmetic surgeryd by extremely greater aim of service or in fact pure services.RITZ CARLTON ritz_carlton_logo.jpg intangibility Perishability Lack of Owners hip Heterogeneity InseparabilityDifferent customer will opine differently on their experience at Ritz. customer involvement plays life-sustaining role.Customer need to come in contact with hotel -Service provider.No Exchange of any Items takes place as part of primary offerings.Simultaneous process of producing and consuming service. warmness of Ritz Carlton success measure depends on Experience of customersFigure 1 Position of Ritz-Carlton in the crossroad SpectrumAssumptionsRitz Carlton as discussed above is not only a subsidiary of Marriot Hotel Incorporation but also a LLC that deals with various type of accommodation. This does not plainly include hotels but rather also involves Clubs and residence properties. This assignment specifically focuses on Ritz Carlton as cosmic string of hotels. Moreover, analysis is completely based on its worldwide presence and not limited to any particular geographic market. This is by design done so as to under point of view marketing of Ri tz Carlton as chain of hotels rather any specific unit. However, for understanding and justification purpose, region specific examples are cited in certain parts of assignment.2. Exploring Secret do-nothing Ritz Carltons SuccessRitz Carlton as an organisation offers its services across five continents. Right from USA to Asia its hotels at foremost look give us experience of beyond imagination architecture and provides stereotype of luxury and elegance. There is no doubt to the fact that physical border (which include premises) in case of service industry act as one of the most important element, that define success criteria for influencing consumer behaviour (Bitner M.,1992) and portray what it stand for. Physical evidences i.e. tangible items add value to service being offered. However, it can be argued that it is not the lone measure responsible for hotels success. The elementary yard behind this is, a customer never judges a hotel solely on foundation of its tangible infras tructure (Building, Technological availability, Type of Rooms etc) but rather there are number of other elements that play vital role. This part of assignments will try to identify such important factors responsible behind Ritz Carlton success.successfully Targeting SegmentationThe need of customers varies for various reasons and therefore it is very important to identify prospective strategic customer for organisation, (Johnson et al, 2008) at same point of time organisation must also have calibre to satisfy the targeted group of customers. Ritz- Carltons continued success, behind the scenes depicts its ability to successfully targets it ingredientation, offering perfect Marketing Mix elements. Moreover, it also ensures that modifications are made in marketing rumple elements with changing scenario in market trends and both these factors act as pick up elements. Kotler et al (2009) emphasise on a point that, marketing is all about forming strategy towards consumer and customer needs and thereby offering service or product that satisfy those needs. Ritz Carlton as an organisation in true sense is perfect at adjacent and applying this basic ideology. This assignment aims to identify success factors of Ritz Carlton in light of marketing go elements with a view to justify above argument.Identifying Market Focus (Segmentation) Marriot Hotels has divided their business to number of segments where Ritz Carlton serves as Luxury Lodging (See Marriot Hotel Incorporation, 2008) and hence it is very unequivocal from this fact that Ritz Carlton as a company exists to serve luxurious hospitality Ritz Carlton hotels are located at more than 70 destinations, the basic customer segment which Ritz-Carlton targets is, people with rich lifestyle in all aspects of life. Irrespective of any geographic location on earth, age, social-cultural belief, opinion of an individual, the common element that Ritz tries to concentrate is great deal with Lavish living. thusly, it can b e invariably noticed that Ritz Carlton adopts concentrated targeting method towards Psychographic segmentation. As Brassington Pettitt (2007) rightly points that lifestyle segmentation is very difficult to define, we came up with following charges that Ritz Carlton try to target. (See figure 1.1).Psychographic SegmentationRitz CarltonFigure 2 Targeting Customer SegmentationFactors Defining Success of Ritz CarltonPerfect Offerings (Product)The product anatomy (See figure 3) of Ritz Carlton illustrates that it is not just a customary hotel which satisfies basic needs but rather, it aspires to provide unforgettable experience to its customers, which perfectly matches its target market. Most importantly, providing value added services as personalized attention very well justify its marketing appeal to customer Experience The Ritz, enabling it to exceed customer expectations. Moreover, this value added services acts as arising of tremendous additional r raseues for Ritz Carlton. (Bax ter J, 2007) One of vital point to focus is product development undertaken i.e. offerings of special packages, with a view to quarter more customers and adapt to current market situations. (See Appendix) Furthermore in hospitality industry, locations act as products, as it creates value to selling points and influence buyers behaviour as well (Brassington Pettitt, 2007). All properties of Ritz Carlton are majority placed in USA, China and European countries which are strategically located as it intends to focus on top most tourism and business destinations of the world. (See UNWTO, 2006) Moreover, Ritz Carlton has its hotels at New York, London, Paris, and Dubai which are strongest cities in terms of highest occupancy rates of rooms. (Worth S., 2009)ritz_carlton_logo.jpgFigure 3 Product Anatomy of Ritz CarltonDirectly getting in tip with end Customer (Place)In service industry generally, there exist direct selling between service provider and end customer and the basic reason be hind this is core characteristics of service products by nature (i.e. Perishability, Intangibility, Heterogeneity, and Inseparability) as discussed above. (Cowell, 1984) The activity of providing service for hotels initiates as soon as customer triggers its efforts for bookings. Ritz Carlton recognises importance of summon in online booking which almost doubled in 2007 (Research by Travelclick cited in Baxter J., 2007) and offers easy access to its customer to book from its own website. Ritz Carlton has also entered into best addressable rate programmes with website as (such as Thomson.co.uk, InspiredLuxuryEscapes.com) to play with consumer confidence to get cheapest rates on web. This evidently suggests that primary focus of Ritz Carlton is to directly contact the customer which is vital need of service marketing i.e. to reach out customer and influence their behaviour encouraging them to experience your service (Brassington Pettitt, 2007).Pricing Concentrating towards Sub-Segme ntations ( impairment)Price must change customers percept towards compensation of service offered and value paid against it (Jacques et al, 2007) and therefore it is vital to ensure that pricing strategy is in synchronisation with segment targeted. As Javalgi et al (2006) rightly indicates that Ritz Carlton extends it services to industry executives, meeting and corporate travel planners, and affluent travellers, targeting sub-segments also plays important role. Ritz-Carlton has carved niche for itself which is evident from various range of prices its offer. At Ritz London one night accommodation costs from about 250 up to 3500, while similarly in USA markets the range exist between 200$ to 3000$ (As on 10 march 2010). This suggests that Ritz Carlton concentrates on sub segmentation acts as an advantage. However, base pricing is one of the field of forces where Ritz Carlton needs to seek improvements (See Current Positioning part) to attract more customers.Brassington Pettitt (20 07) also brings to notice important issue that price is an important tool to manage demand. Understanding this vital point, during recent tough time company brought out number of attractive packages to influence more customer (Like package of 2 nights stay at 449$ per family) (See Schultenover J Strout E, 2002) and that defines companys ability to alter marketing mix elements as per relevant conditions.Balance Innovative Endorsement (Promotion)Ritz Carlton involves itself with both form of promotional activities as referred by Berkowitz et al (1992) i.e. product orientated and institution oriented. It adopts a balance promotional strategy ensuring that using product oriented approach it continuously communicates with customers regarding its USP (Unique Selling Point) and recent offerings on other hand it uses Institution oriented approach to preserve Ritz Carlton as a Unique brand with historical excellence influencing consumer behavior.Impact of Promotion on Consumer Perceptions towards Ritz CarltonHigh ExpertisePremium brand nameLife Time ExperienceSymbol of StatusGoing Beyond ExpectationsRespect For BrandA payoff of PrideInnovative and benchmark for forestFigure 4 Impact of Promotion on ConsumerIn addition to this, Ritz Carlton adapts PULL strategy (Brassington Pettitt, 2007) using perfect medium to directly communicate with customer. With rise in concept of Social marketing Ritz Carlton has tied up with Travel Click to actively manage its promotion over web. (Hospitality.Net, 2009) To target business travellers, make-up adverts are given in leading business magazines (e.g. Business Traveller) along with television adverts and advertising in airlines. One of the important observations is Ritz Carlton uses its own Website as major promotional medium. All package brochures, promotional videos, Ritz Carltons own magazine are uploaded to website. (See The Ritz Carlton, 2010)One of the significant points of observation is Ritz Carlton provides innovative edge to its promotion strategy. One of the sheer examples is, it markets its biggest asset i.e. Employees. There is not a single promotional videos which fails to give importance to its own staff representing them as creators and followers of high quality standards in industry terming them as Our Ladies Gentleman (See The Ritz London, 2008 Ritz Culture, 2007). Apart from this, instead of using simple adverts Ritz Carlton has created short films which are aired on televisions, hotel rooms, and websites to make people understand what singularity of its services is. (See The Delay, 2008 The Last Night, 2008, New Gold Standards, 2010, Audi and Tarma, 2007). Hence innovative and a balance promotional strategy is one of the important factors responsible behind Ritz Carlton success.Staff- A Biggest Asset (People)March, J.G and Simon (1958) emphasise on vital point that organisations are primarily formed and governed by people and therefore image reflection of organisation largely depend upon actions of its staff and this is especially true in case of service industry as it deals with process of interactive marketing (Kotler P and Armstrong G, 2004 Brassington Pettitt,2007). Ritz Carlton understands this vital point and implements customer focused approach. It aims at hiring right people, providing best fit to organisations culture of Putting Customer First who are characterized with a strong sense of determine and overall desire to go beyond the call of duty. (Emerald Database, 2003) Furthermore, Ritz Carlton goes step ahead, as an organisation, it strives to get known for its excellent service and that act as a make out to its success. Organisation best at this must try to invest their money, talent, time and attention to strengthen their current positing (Ferrell O.C Hartline M., 2006) and that what Ritz Carlton does by investing in its people. In this process, over the year Ritz Carlton has developed and raised bars of customer services with help of their s taff which itself now act as their behavioural core competence that cannot be easily imitated by others. (Johnson et al, 2008 Bacon, 2005)Internal Values Operations (Process)It is important for service industry to pay attention to both, employees and customer to successfully implement process of service profit chain. Ritz Carlton as an organisation aims to take extreme care and respect for their employees, with an understanding that, in return they will put up efforts to fulfil even unexpressed wishes of their customer. (Kotler P and Armstrong G, 2004) The employees are empowered, trained to develop gold standards (See Emerald Database, 2002) and are considered biggest strength of the organisation which produces exemplifying services towards customer. Employees are trained motivated to develop relational exchange with customer with a view to increase loyalty and development of brand. (Jain R and Jain S, 2006)Creating ValueInternal ProcessCUSTOMER focussingFigure 5 Service Profit C hain for Ritz CarltonAnother important contributing factor is Ritz-Carlton has been successful in developing its own culture of work (Kent W, 1990) which is now considered as gold standards (Benchmark) towards quality development in servicing industry. Ritz Carlton also uses CLASS database with purpose of registering likes/dislikes, Interests, preferences, previous problems faced, attitude of every individual customer to provide personalised service. Hence, putting all together, these are innovative process that enables Ritz Carlton to fully engage employees and generate a creative delightful experience to its customer on one hand and simultaneously developing an unique core competence for itself at other hand.(Timmerman J, 2009)2. Current PositioningAccording to Kotler et al (2009), all marketing strategy is built on STP Segmentation, Targeting, and Positioning. A company discovers different needs and groups in the marketplace, targets those needs and groups that it can satisfy i n a superior way, and then positions its offering so that the target market recognizes the companys distinctive offering and image. Positioning is process of analysing product or service, offered in context of private-enterprise(a) space (includes buyers and competitors) it works out. (See Brassington Pettitt, 2007 Kotler et al 2009) It is a way of creating and engaging a place in the mind of the target market by highlighting the companys offering, brand and image. The ultimate outcome of positioning is a flourishing establishment of a consumer focused value proposition, in other words a convincing reason why the target market should buy the product (Kotler, 2003) and therefore it act as base to companys success. This part of assignment aims to explore current positioning of Ritz Carlton in market.The basic idea is to understand customers perception towards our brand and towards our closest competitors. At same point of time identifying attributes that are responsible for creation of this illusion in minds of customerIdentifying relevant attribute playersThe various attribute offered by the brand represents its market position, which are viewed and compared against other brand. Brands that offer similar package of attributes are deemed to be in the same competitive set (Dev C.S et al, 1995) and therefore it is important to concentrate on direct competitors rather than industry as a whole. Efforts must be laid down to identify players with similar attributes competing on same values. (Johnson et al, 2007)It is a nature of the hospitality industry that most of the attributes offered are intangible which makes it tricky for the customer to differentiate the offerings of the competitor as such things can be experience only by staying in the hotel. A part of the positioning is also subjective, as it involves customers perception towards brand.Here, analysis is based on Marketing Metrix Hospitality Index* which reveals price and level of customer happiness from the feedback of more than 35000 customers across world. (See appendix) There are numerous players in hospitality industry targeting luxury segment and so it is decided to firstly filter relevant players on basis of tangible attribute i.e. area of market covered geographically, as analysis is based on worldwide scenario. This enables us to get core market competitors (See figure 2) (To an extent it influences customer choice of hotel, as it defines scope of service being provided and also impacts brand creation process in eyes of customer)HotelsArea CoveredNumber of PropertiesRitz Carlton LLC across 5 Continents72Fairmont Raffles Hotels International GroupAcross 5 ContinentsAround 65Starwoods Hotel Resorts Le Meridien16 Countries116Four Seasons PLC35 Countries Across 5 Continents83InterContinental Hotel GroupAcross 60 Countries166(The Ritz Carlton, 2010 Four Seasons, 2010 InterContinental Hotels Resorts, 2010 Fairmont Hotels Resorts Starwoods Hotel Resorts, 2010)Table 1 Identifi ed Relevant Players on Basis of Geographical areaThe other two most important attributes identified from view point of customer are price and quality. Quality can be judged on several(prenominal) others important sub attributes (As Quality of food and beverage, physical appearance and in-room facilities, helpful and courtesy of staff, Technology etc.) and therefore this aspect is judged on basis of customer satisfaction index which provides comprehensive picture of it.About MMHI* Based on 35,000 customer interviews conducted each quarter, the Market Metrix Hospitality Index (MMHI) is the largest and most in-depth measure of hospitality company performance available today. (MMHI, 2010)Taj Hotels Resortsrc_logo_enIndustry CompetitorsFour Seasons Hotels PLCStarwoods Hotel Resorts -ST RegisMandarin Oriental Hotel GroupFairmont Raffles Hotels InternationalJumeirah Hotels ResortsPan Pacific Hotels ResortsWyndham Hotel GroupMarket CompetitorsMarriot Hotels Incorporation*Oberoi Hotels Resorts rosewood Hotels groupInter Continental Hotel GroupStarwoods Hotels Resorts Le MeridienFigure 6 Competitors analysis of Ritz-CarltonStarwoods Hotel Resorts* Its Brands, St. Regis Le Meridien targets luxury segment indoors total of 152 properties across world.Marriot Hotels Incorporation* Although Ritz Carlton is subsidary of Marriot Hotel Incorporation, it has got more than 18 brands and there is defiante possiblity that these brand may compete amongst each other and therefore Marriot Hotel Incorporation is also considered as Industry competitor.Perceptual occasionThe graph represents all the players targeting luxury segment with widespread presence all over the world under hospitality industry. Yet, it must be noted that level of quality, prices offered would differ under this banner as well and it is this factor that differentiates best in comparison to average player in eyes of customer which can be clearly identfied below. Ritz Calton fall under the segment of offeri ng High Quality with High Price.High QualityOberoi HotelsRitz CarltonLow PriceHigh PriceFour SeasonsInter ContinentalLe MeridienLow QualityFigure 7 Perceptual Mapping of Ritz CarltonPerceprtual Map enales us to find out gaps and provide us inights towards undertaking competitive action needed.(Brassington Pettitt)Gaps to be filled Up Customer needs to be satisfied.Pricing StrategyAs discussed above Ritz Carlton concentrates on sub-segments that act as advantage however the minimum base price it offers is subject to risk. Ritz Carlton price starts at about 200$ while that of Oberoi hotels reporting upper limit customer satisfaction (93.7) offers base price at 85$.Although, Ritz Carlton brand value is quite high compared to Oberoi group yet, Its a huge gap and therefore it must revise its pricing strategy. Moreover, all of its market competitors also offers relatively too low price, closest being Intercontinental group offering 156$ (See appendix). At same point of time Ritz Carltons closest rival Four Season offers almost equal quality of service (86.6) at price of just 141$ which is matter of worry as well.Improving Loyalty programmesRitz Carlton understands that complete customer satisfaction is one of the vital strategic to retain and maintaining long term relationship with its customer and it is best practising at that. (Bacon, 2005 Emerald Database, 2004) However, there is scope for improvement in its loyalty programmes as recent data indicates its loyalty program strength of 5% compared to industry average of 10 %. (See appendix). This will enhance its potential to gain increased customer loyalty.Attracting New Market by adapting service innovationsRitz Carlton is aware of the fact that the key to a hotels survival is its ability to cater services with changing needs and life styles of customers. (Min et al, 2002) There is no doubt that organisation completely understands changing relish of consumers i.e. people are now becoming more casual compared to traditional formalin approach.(Gunter and Heather, 2007) But this needs to be communicated to customers and therefore, there is need for Ritz Carlton to presents itself as modern, technological hotel group supporting needs of modern, young travellers. At same point of time, as recommended by Victorino et al (2005) company must move further towards service innovation with use of technology to differentiate itself from others. Ritz Carlton has already started implementing steps towards this approach however there is need for rapid actions and wide promotions with intentions to quickly change consumer perception towards its brand.2000 Euros for Managing Guest Grievance A Strategic MoveRitz-Carltons employees are allowed to spend up to $2,000 to redress a guests grievance. The employees are en desireed to spend the money to make a memorable stay for the guest in the hotel. Employees are encouraged to solve the guests complaints immediately on the spot. Permitting the employees to spen d a sum of $2,000 shows how much the company trust the judgement of their employees and employees can even spend more than $2,000 with the permission from general manager. The basic logic behind such action is, with existence of fierce contention within the market it is always difficult for firms to increase their market share and therefore key to continue successful growth lies in devoting larger part of firms resources on existing customers with intention to retain them and gain their loyalty (Tepeci M, 1999) Moreover, such act adds value to brand creation and customer satisfaction and that encourages customer to manufacture brand loyal. (Kandampully J and Suhartanto D, 2000) Most importantly, the question of such spending exceeds overheads does not arise as it is obvious that it doesnt get used on every customer. It acts as meaningful amount yet, used rarely. (Reiss R, 2009).Customer satisfaction is the key to customer retention. A greatly satisfied customer stays loyal longer w ith the company and talks favourably about the company. A loyal customer is less sensitive to price, pays less attention to the competitors brand and cost less to serve than vernal customer. From the customers who registered a complaint, between 54% and 70% will do business again with the same company if their complaint is resolved, these number could be pulled up to an enkindle 95% if the customer experiences that their complaint is resolved quickly. Customers who have complained to an organization and had their complaints satisfactorily resolved tell an average of five people about the good interference they received (Philip Kotler, 1977), which indirectly contributes to attract further new customer. Expanding the customer retention rate accumulates the customer lifetime value, and therefore this means life time tax revenue for company. On other hand company, attracting new customers are costly as that include cost of promotions, advertising and so on which can be avoided. The refore such action is termed as strategic Move by Ritz Carlton.There is also another point of view to this scenario which impacts internal working culture of within organisation. Allowing such amount to spend makes Employee feel that company respect them, trust them, considers them responsible and valuable and this generates feeling of empowerment impacting concept of service profit chain as discussed above. Employees get more engaged with company and works more responsibly ultimately resulting to exceptional customer service, which is the core aim of organisation.AppendixProduct Development by Ritz Carlton (i.e. to offer Special Packages) aims to attract more customers by influencing their behaviour and encouraging them to celebrate this important occasion with them and turn them to Life time Memories. (Festive Season Packages during Easter Christmas, Valentine Day at Ritz, Summer Break Packages, Weekends Special, and Family Packages)Ritz Valentine photo.jpg(Rogers Mark, 2009)Along with these Ritz Carlton also developed special packages for companies during times of recession to provide luxury at budgeted economy. Packages were upgraded to more facilities at lower price. Significant efforts were also laid down in promoting it and communicating it to end customers as well. This indicates Ritz Carlton ability to act as per changing external situations (Schultenover J Strout E, 2002)MMHI Results Market Metrix Hospitality index indicating customer satisfaction and average price results for hotels under luxury segment and Up Scale hotels.page0001.jpg(Source MMHI Results, 2009) idiot box BibliographyOfficial Ritz Carlton Promotional Videos1. New Gold Standard (2010) http//www.youtube.com/watch?v=IW70hBP5cIc (Promotional Videos at hotel rooms and Websites)2. Ritz Culture (2007) http//www.youtube.com/watch?v=W_iFSAAoQ-A (Interview of Diana Oreck, Vice President international Learning and Leadership Center)3. The Last Night (2008) http//video.yahoo.com/watch/2296201 /7207129 (Ritz Carlton Short celluloid in association with America Express)4. The Delay (2008) http//www.youtube.com/watch?v=3oFz8E5fbJQ (Ritz Carlton Short Film in association with America Express)5. The Ritz London (2008) http//www.youtube.com/watch?v=jQGlyhlhcK0 (Documentary on The Ritz London)