‘Which business growing idea will work for a provincial hotel?’
Q: We’re a group of graduating marketing students this coming school year. We’re enrolled now in a northern Luzon university doing summer make-up classes. For our summer course’s marketing project, our professor has assigned us to apply to one of the hotels in our province your series on business growing. He has permitted us to write you and ask some questions. But please do not identify us in your answer.
We noticed that in the series, every time a new business is involved you offer a different business-growing model. Almost always, our guess about the applicable model was wrong. That was the case with the car dealership, the advertising agency, and the LRT and MRT food stalls.
So what about our assignment, a provincial hotel? Please give us some tips about how we should go about identifying the correct business growing model to apply. Will you let us know the template to use for this purpose?
A: All along, we’ve avoided referring to this popular but dangerous diagnostic short cut called “template.” So we’ll start with an important distinction. The template that most students and even many marketing practitioners have gotten used to is “the solution-and-results-driven” template. It’s the kind of template that leads you and gives you a short cut to the answer. In this sense, it’s the “smart template.”
But the more insight-rich template is “the process-driven-and-solution-seeking” template. This template may come out with the same solution and results but when it does, it is with the clear understanding of how the solution and results flowed from a process of problem solving and result generating. A defining example will explain.
In this example, we will answer your questions as if your group is the marketing arm of this hotel. So here is the specific case of Sogo Hotel located along the main highway and fronting the SM shopping mall in San Fernando, Pampanga.
Last March 2012, the Senior MRx-er stayed overnight there to conduct a two-day in-house seminar with a different SME client. Here’s the business-growing market segmenting process that came out of observing actual and then prospective Sogo hotel guests.
Among actual existing Sogo hotel guests, there was first of all an untapped market segment of “family” hotel guests. The Senior MRx-er saw two registering couples when he arrived. The first was with three kids while the second had two. We say “an untapped market segment” because your hotel rooms were not set up for family guests. This is a pity because the family market segment can probably easily double your hotel’s monthly revenue.
So why don’t you experiment with, say, converting half of the second or third floor rooms to serve this segment. Promoting to this market can be inexpensive when done via the hotel’s website and using the social network of Facebook and/or Twitter.
There’s also a second undertapped set of market segments among your existing hotel guests. The configuration of your hotel rooms and motel units is three-price-segment targeted. There’s an “economy,” a “premium” and a “super-premium” segmentation. As Sogo’s marketing group, you can think of “monthly events” or some kind of “monthly occasions for celebration” to promote with these three customer price segments. This idea fits in particular the super-premium segment of office executives of San Fernando’s business establishments. You can give out discount cards to these target customers during any of those monthly events or occasions for celebration.
On day two of his stay, the Senior MRx-er woke up early and decided to go out for breakfast across the street at the SM Mall. But there were no restaurants open except for Starbucks, which opened at exactly 8 a.m. Three prospective customer segments were observed.
The first of these were joggers. There were four of them who went inside Starbucks and ordered coffee and pies and sandwiches. This is an unserved market segment for your Sogo. The Senior MRx-er overheard two joggers complaining about how “alikabok” (dusty) the highway has become for jogging. But behind Sogo’s hotel building were long rows of motel units spread as in track and field shaped land area. The cemented pavement along the circumference of this area can offer joggers a quiet, “so-clean-so-good” jogging ground. Then, they can get their after-jogging breakfast at your coffee shop. Promotion can be also via your Sogo website, the social network and via e-mail marketing. This is a market segment that’s an almost zero-base investment opportunity for business growing.
A second prospective customer segment is made up of office executives. During that breakfast period, the Senior MRx-er saw four to five such executives waiting outside Starbucks before 8 a.m. However, only two waited till the opening. These executives are an underserved customer segment for your hotel. You can promote your coffee shop with them again via your website and the social network. If you can tie up with McCafe for this opportunity, you stand a better chance of drawing many of them away from Starbucks. As you know, McCafe has been successful in eating into the Starbucks market share by offering the same menu but at substantially lower prices.
A third prospective customer segment consists of graduating high school and freshmen students. During that same breakfast hours, they sat outside Starbucks in those chairs around Starbucks’ iron round tables. One or two of them sent inside to order a cup of coffee that the group of four to five shared. For solid food, they called an itinerant “taho” (soya drink) vendor. This is a segment also for Sogo’s coffee shop if it succeeds in tying up with McCafe or in having a McCafe-like place. The same inexpensive promo will work here, namely, via your Sogo website and using social network especially Facebook and Twitter.
In sum then, if you were to follow this process-driven business growing template, think of your hotel business as participating and prospectively participating in different market segments around your neighborhood and trade area. Model your thinking process after what we illustrated above.
Keep your questions coming. Send them to us at [email protected] or [email protected]. God bless!
