Critical Issues in Hospitality Assignment Sample

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Critical issues in hospitality

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“Customer relationship marketing (CRM) is an effective way to increase customer loyalty in the

hospitality industry. Discuss?”

Customer relationship marketing (CRM) is the most recent and effective way to develop

customer retention as developing good relationships with the customers have become the most

important part of hospitality industry as customer is the most important asset for this industry

(Bai, 2011). Relationship marketing is very distinct from management discipline as the

hospitality industry has completely shifted its focus from increasing revenues and market share

to maintaining customers as assets by using both marketing and non-marketing resources. Over

here various ways to increase the efficiency of the whole hospitality industry with reference to

gaining customer loyalty will be discussed. The relevance of various marketing strategies will be

seen and the ways in which they help in building customer’s trust in a product will be evaluated

so that promise of better delivery of services can be kept (Malefyt, 2009).

According to Little (2003) CRM is basically a business approach where the client

relationship with clients, customer loyalty and brand value are fabricated through preparation of

marketing strategies and designing of business activities. The impact of relationship marketing is

very high on customer loyalty especially in hospitality industry where luxury and comfort is

highly needed as to maintain regular outflow of customers (Littler, 2003). As said by Brink

(2009) the key relationship practices which are supposed to be followed in hospitality industry

are commitment, conflict handling, communication, trust and relational bonds on the loyalty

which customers share with the business. These practices have a great and significant positive

impact on developing the brand as well as customer loyalty (Brink, 2009).

Customer loyalty is the most dominant factor which decides the success of a business in

long run. Brandi (2001) also said that loyalty is derived out of the level of satisfaction and the

company’s image which the customers have or develops in their minds before they approach and

become loyal to a particular brand (Brandi, 2001). Thus customer’s loyalty is directly related to

the hospitality industry as a whole. Customers are looking for better and comfortable services

which can give them the best of the deals to make out the right value for their money. But at

present there are different service providers which have increased the option to make choices




from all the available competitors and select the one which gives better services than the other

(Pelloni, 2004). The businesses which together make this industry work out are multi star hotels,

restaurants and food chains, travel and tour operators, escorts and guides and many other service

providers. When all of these factors work together to provide the satisfaction which a customer

expects from a business tends to develop brand loyalty and brand awareness for a business to be

renowned and known in the minds of the customer. These factors certainly will make the

organization to be the first choice of the travellers and will intend to bring in more and regular

visitors (Huddleston, 2000). Thus it can be also seen that consumers these days are more brand

aware and seek maximum satisfaction to get value of their money.

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Thorough closeness with the customers in maintained on the commercial basis by

recording and keeping their data recorded on electronic memories and follow up is done with

them. In casual marketing, the data base over here captures data and makes marketing programs

suiting the individual’s need. They are extremely tough to create because the firms can hardly

track the individual customers’ need and decide the marketing practices on the same level

(Baron, 2010). In technological marketing, various IT tools are used to serve relationship

building opportunities and use all other IT sources to communicate with the customers and




develop the ways to make the service firm’s image strong in the minds of people. On the other

hand, referral marketing helps in developing marketing plans and implementation of the same

depending upon the referrals and also to stimulate the same (Arasli, 2007). The impact of same

may take time to get visible but will help in developing long term conflict free relationship with

the customers. Similarly live-in marketing is a alternative of marketing and advertising in which

the target consumers are allowed to enjoy the hospitality services in relaxed atmosphere which

will ultimately help in developing a non-invasive advertising (Egan, 2008).

The ways of building effective customer relationship are many which can help in getting

more of the support from customers. Hospitality industry should come out with such a marketing

plan which may help in getting more of the customer’s involvement, for instance, firs can hold

special get together, contests, events and gathering with their guests so that they can make their

stays in hotel or travel experience enjoyable (Caemmerer, 2009). This will definitely help in

building and strengthening customer relationships and will also help in building community

within the business. The work is not done by conducting such events just once, rather frequency

of the same does matter. Firms should regularly communicate with their customers so as to make

them feel valuable. Although the frequency should not be too high as this may start irritating the

customers (Waeraas, 2009).

Duffy (2003) clearly says that trust is the glue which holds the customers and maintains

relationship. Trust can be developed only by letting customers know what a business does and

whether it maintains transparency in its business operations and provides valuable and authentic

services. Thus the expectations should be met to build great customer relationships. Businesses

can publish regular newsletters on monthly basis and can provide a customer’s corner where they

can give their feedbacks and suggestions which they would recommend to be fluffed in the

business and the hospitality service they have experienced (Duffy, 2003). The brand promotion

and awareness among the mass needs to be spread and communicated through marketing

channels in the ways in which customers can understand. Whether it is a new or a well-

established business, it is very important to promote the business in the most convenient

language which can be understood by all especially in the region where marketing and promotion

is undertaken (Strydom, 2001). In further paragraph, the various segmentation of loyalty will let




know the ways in which firms can focus on the consumer groups according to any of the

business segments.

Customer loyalty can basically be divided into four general segments namely- no loyalty,

inertia loyalty, latent loyalty and premium loyalty. These loyalty criteria are defined on the basis

of different consumer behaviour and their preferences of brands and services working in

hospitality industry. So every business must considerably learn to earn and keep its customers

loyal to ensure its long success in the market place (Steinberg, 2011). First comes no loyalty

segment where customers do not have or share any attachment with the business because they do

not expect much and do not make any severe effort to look for the best among the available

options. For example, if a person going to any country or destination just for the fact of paying

homage at any sacred place for a day or two, he won’t bother about the hotels or restaurants he

will stay or eat rather will only focus towards completion of his purpose of travelling (Sisay,

2009). Unlike types of CRM, there are different types of customer loyalty as well which designs

the base form for the whole relationship marketing processes.



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There are many factors which influence customer’s loyalty in hospitality and develop

commitment towards the product or services being provided. As per the factors defined by Yoo

(2011) the most important one among all is core offering which includes factors such as location




and premises, types of services and products which the company sells (Yoo, 2011). These

elements play larger role in building customer loyalty as attractive locations and services are the

key seller of business and people make their primary travel and stay choice by looking at the

infrastructure only. Next comes the satisfaction level which is indeed essential for every business

to fulfil. According to a marketing survey, it has been found out that 90% of the people make the

choice of the same place and services if they feel satisfied with the same (Malefyt, 2009). Thus it

is clear that elements of market place such as opportunity to switch and inertia loyalty tend to

form the key factors in loyalty development. If the number of suppliers is high, it provides more

flexibility to the customer to switch, so more time and effort needs to be invested to make the

business create a significant effect on the minds of people and they turn to become brand loyal

(Kayaman, 2007).

Share of wallet can be one of the key factors for business’ success if the customers

become completely loyal. Totally loyal and satisfied customer will give the firm or business his

100% share of money they spend in the sector. This retaining such customer is far more

important rather than looking for creating or acquiring new customers (Caemmerer, 2009). Thus

customer relationship marketing tends to for customer become loyal to a brand and develops an

emotional link with that particular organization.

CRM has a direct and most impactful link with the customer’s loyalty. One of the facts

behind saying the same is that today the customer is more informed and furnished with

knowledge which a business can’t imagine. This has shown a drastic shift in consumer power

and has forced to bring alterations in the ways in which business has to work to enhance its

selling. Today, relationship marketing has become a wider and diversified dimension which has

been further supported by different modes and channels of marketing and those may directly help

in building strong customer loyalty (Guenzi, 2004). According to Foss (2001) the various

methods available to share strong brand loyalty can be through social media, e-mails, loyalty

programs, customer services and many more. The bottom line is that all these marketing factors

directly contribute to gain more and strong loyal consumer base. No matter how strong the

management of the firm is, it needs to be pushed by well-furnished customer services which is an

essential part of marketing and it also helps in developing loyal customer base as they feel




completely satisfied by the services so provided (Foss, 2001). One of the cases taken by Chen

(2000) saying that a customer has booked a hotel for his wedding programs, he would require a

regular assistance for making different arrangements, at this time the relationship marketing

comes into force where the marketing department of the hotel can provide different discounts

and nominal charges for providing services and make arrangements to make the celebration

grand with less of customer’s worry and botheration. This will definitely make the person feel

satisfied and become loyal and also may suggest his family and peers to undertake future

celebration at the same place (Chen, 2000).



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REFERENCES

Baron, S., Conway, T. and Warnaby, G., 2010. Relationship Marketing: A Consumer Experience Approach. SAGE Publications Ltd.

Brink, A. And Berndt, A., 2009. Relationship Marketing and Customer Relationship Management. Juta and Company Ltd .

Caemmerer, B., 2009. The planning and implementation of integrated marketing communications. Marketing Intelligence & Planning. 17(4). pp.524 – 538.

Chen, S. and Huddleston, P., 2000. A comparison of four strategies to promote fair trade products International Journal of Retail & Distribution Management. 37(4). pp.336 – 345.

Duffy, L. D., 2003. Internal and external factors which affect customer loyalty. Journal of Consumer Marketing. 20(5). pp.480 – 485.

Egan, J. And Harker, M., 2008. Relationship marketing. The University of California.

Foss, b. and Stone, M., 2001. Successful Customer Relationship Marketing: New Thinking, New Strategies, New Tools for Getting Closer to Your Customers. Kogan Page Publisher .

Guenzi, P. and Pelloni, O., 2004. The impact of interpersonal relationships on customer satisfaction and loyalty to the service provider. International Journal of Service Industry Management. 15(4). pp.365 – 384.

Kandampully, J. and Suhartanto, D., 2000. Customer loyalty in the hotel industry: the role of customer satisfaction and image. International Journal of Contemporary Hospitality Management. 12(6). pp.346 – 351.

Brandi, J., 2001. Building Customer Loyalty: The 21 essential elements...in action. The Walk The Talk Comapny.

Kayaman, R. and Arasli, H., 2007. Customer based brand equity: evidence from the hotel industry. Emerald Group Publishing Limited.

Kotler, P., 2008. Marketing Principles. Pearson Education India.

Little, A. And Marandi, E., 2003. Relationship marketing Management. Cengage Learning EMEA.

Malefyt, W. D. T., 2009. Understanding the Rise of Consumer Ethnography: Branding Techno methodologies in the New Economy. American Anthropologist. 111(2), pp.201-210.






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BIBLIOGRAPHY <http://www.mindtools.com/pages/article/newSTR_94.htm>.

<http://www.marketingdonut.co.uk/marketing/marketing-strategy>.

<http://www.tandfonline.com/doi/abs/10.1080/19368623.2012.660564?journalCode=whmm20#.

Up60XcQW3cg>.

<http://www.techopedia.com/definition/23326/customer-relationship-marketing-crm>.



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