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INKIJKEXEMPLAAR ©SVHMarketing & Sales for the Hospitality Industry These factors all influence the price. The price of the product must match the business formula. Otherwise guests will feel that something is not quite right. A certain quality and service level is an aspect of the business formula. A high price with little service and untrained staff will leave the wrong impression on the guest. The marketing objectives of a business also influence the chosen price. If the business wants to secure a larger market share, special offers can be an effective way to attract new guests. If the hospitality entrepreneur has a good pricing strategy, he will be able to realise the optimum turnover or profit. The profit depends on his entire strategy and thus not only on his turnover but also on his cost management. When determining his pricing, the entrepreneur may have a certain goal in mind, such as securing a high market share, achieving a high turnover or earning the optimum profit.150

Chapter 6 | Price (strategy) 6.2  |  Pricing methods The hospitality entrepreneur must set his prices in some way or another. In practice, we see that hospitality entrepreneurs base their prices on three principles:INKIJKEXEMPLAAR ©SVH Pricing method Principle 1. cost-led method costs incurred 2. competition-led method competition 3. demand-led method market demand We will discuss these principles in the sections below and take a detailed look at the most common pricing methods.Cost-led pricing methods 6.2.1  |  Cost-led pricing methods The method is based on the principle that the entrepreneur must recover the costs incurred to produce the product by charging a certain price. Alongside recovering the costs, the entrepreneur also charges the guest a fee for the entrepreneurial risk (the profit). If hospitality entrepreneurs choose this principle, there are three different pricing methods that they can use: Markup method a. Markup method (cost-plus method)(cost-plus method) In restaurants, the food cost or raw materials used generally serve as the basis for the consumer price. The consumer price is the price that the guest actually pays. For instance, the price could have the following structure: food cost of dish €2.99 gross profit - 5.97 net selling price €8.96 VAT 6% - 0.54 menu price €9.50 151

Marketing & Sales for the Hospitality Industry Food cost The food cost is the cost of the raw materials used (the cost of the ingredients). The gross profit covers all the remaining costs and the net profit. Given that the price is based on the costs, this is also known as cost-plus pricing. The hospitality entrepreneur often uses a multiplication factor (the markup) to arrive at the consumer price. On average, the food cost of a dish is multiplied by three.Cost-plus pricingINKIJKEXEMPLAAR ©SVH Target pricing b. Target pricing Hotels cannot use the cost-plus pricing method. A hotel room does not use any raw materials, which means there is nothing to base a price on. A hotel manager is often told by the owners that he needs to make a certain profit. He can thus be told that he must earn a return of 10% on the hotel’s assets. The profit rather than the costs serves as the basis of the price. The price is then derived from the target profit. The manager assumes a certain occupancy rate (number of rooms sold) and budgets for the costs made at that rate. He adds the expected profit to the total costs. He then takes the profit and total costs and divides them by the expected sales (number of rooms sold). Target pricing This is how hotels calculate their average room price. The average selling price is based on a particular target, hence the name target pricing. Target pricing is mainly used to determine whether a hotel project is feasible.Cost of goods sold c. Cost of goods sold (COGS) (COGS) The cost of goods sold is determined by adding up all costs attributable to a product. For most hospitality entrepreneurs, it is not easy to ascribe costs to a particular dish. They can often calculate the purchase price of a dish, but find it much too difficult to ascribe other costs (such as wages, depreciation and interest) to the dish. Businesses that produce large quantities of a product (mass production) know exactly what the total costs of the product are. They will use the cost of goods sold. Although many hospitality businesses are unable able to calculate the exact cost of goods sold, it is still worth taking a good look at the supplementary costs of a product, particularly if the hospitality operator must decide whether to make it himself or buy it in.152

Chapter 6 | Price (strategy) 6.2.2  |  Competition-led pricing Another method that a hospitality entrepreneur can use to determine prices is to look at the competitor’s prices. He then has three options, which we will now discuss.INKIJKEXEMPLAAR ©SVH a. Ask about the same price as the competition Going-rate pricing The first option is to set his prices at the average level of the competition. This is called going-rate Me-too pricing pricing or me-too pricing. This is used in a market in which competition is not based on price. This is called non-price competition. A hospitality entrepreneur will mainly use this pricing method forNon-price competition products that can easily be compared. Few bars compete on the price of beer, for instance. Bars in the same city often ask roughly the same for a glass of beer. Many hospitality businesses look at what the competition is asking for a dish to see if their own price fits the market. b. Ask a higher price than the competition The hospitality entrepreneur can also ask a higher price than the competition does. He will do this if he wants to show that his product is better and/or more unique than that of the competition. This higher price enables him to position himself in the market, as long as his business does actually provide a higher-quality product or service. The higher price then supports his business formula. c. Ask a lower price than the competitionPrice competition The price can also be used to drive out or scare off the competition. Such a case is a clear example of price competition. The entrepreneur then chooses a price below that of the competition.Put-out pricing If a hospitality entrepreneur wants to use the competitive strategy of cost leadership, he will have to charge a lower price than the competition does. He can do this to such an extent that he drives the competitor out of the market. This is called put-out pricing.Stay-out pricing A hospitality entrepreneur can also use low prices to deliberately scare off potential competitors. The lower price makes the market unappealing to newcomers. They face high startup costs and will thus be unable to compete. This pricing method is called stay-out pricing. 153

Marketing & Sales for the Hospitality IndustryDemand-led pricing 6.2.3  |  Demand-led pricing methods method Rather than base his prices on what a product cost, the hospitality entrepreneur can base them on what is good for the market. This is a price that many guests are prepared to pay. The hospitality entrepreneur then uses demand-led pricing. The asking price is a given and the hospitality entrepreneur then calculates whether he can recover the costs he has incurred and earn a fee for the entrepreneurial risk (profit). Demand-led pricing can be seen with set menus and fixed prices for buffets, parties and receptions.INKIJKEXEMPLAAR ©SVH Backward-pricing methodBackward-pricing One way to take a given selling price and calculate the possible food cost of a dish is the method backward-pricing method. With this method, the profit is deducted from the selling price, leaving the food cost. The chef must be able to make the product for this food cost.Backward pricing The backward-pricing method is also called demand-backward pricing. When determining the selling price, the entrepreneur takes into account the competition's pricing and the price that guests expect to pay. Combined pricing method In reality, the entrepreneur does not decide on his menu prices by choosing just one of the three pricing methods (costs, competition or demand). Instead, he will use one of the three as a basis, but will also take the other two into consideration. If he chooses the cost-led method, he must make sure that he does not price himself out of the market, so will also have to take the competition and expectations of the guest into consideration. In addition, the product’s function in the range and how it relates to other products on the menu will influence its price. All in all, determining the menu price is a complex matter. The entrepreneur often takes one of the three pricing methods (costs, competition or demand) as a basis, but will always combine this choice with other important factors.154

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Marketing & Sales for the Hospitality Industry 6.3  |  Range and pricing strategy When determining his prices, a hospitality entrepreneur will also take into account the price of the other products on the menu. If, for instance, the wine on a bistro’s menu costs over €25 per bottle, this will not be in proportion to the price of the food on the menu. The hospitality entrepreneur will want to offer a range of products that go well together, and the price must be right too.INKIJKEXEMPLAAR ©SVH Price range The hospitality entrepreneur will need to consider his price range here. The price range is the difference between the most expensive and cheapest product in a product group. The hospitality entrepreneur can choose a number of different possible strategies that will help him develop a clever pricing strategy for the whole range.Full-line pricing Full-line pricing With full-line pricing, the entrepreneur chooses to price his products in a way that will encourage sales of the whole range. If he chooses full-line pricing, he will know that there must be a certain relationship between the products that he sells. For instance, restaurant guests will always choose a drink with their meal. Drinks thus supplement the meal. Guests are unlikely to come to a restaurant for a quick drink if they are not eating anything. They would then go to a bar instead. As guests come to the restaurant for a meal, they are more sensitive to attractively priced food than to attractively priced drinks. In addition, the price for a meal is much higher and thus easier to remember than the price of an individual drink. If a hospitality entrepreneur chooses full-line pricing, he will therefore consciously calculate a lower profit margin in the meal price than in the drinks price. If he has a main course on special offer and this is bringing in the public, he will also sell more starters and puddings. This is another example of full-line pricing. A famous Dutch restauranteur summed up full line pricing perfectly when he said: ‘They eat me poor but drink me rich!’156

Chapter 6 | Price (strategy) Price liningPrice lining If a hospitality operator opts for price lining, he sets the same price for all products within a product group, despite different cost prices.INKIJKEXEMPLAAR ©SVH You can see price lining if, for instance, all starters on the menu are the same price. Another example of price lining is to offer a three-course menu for a certain price and to allow guests to choose from five starters, five main courses and five puddings. Guests are then more likely to choose what they really like rather than choose a certain dish only because it costs less. Price lining can be applied in various ways on the drinks menu. Product bundlingProduct bundling Some hospitality businesses want to sell certain product combinations. The hospitality entrepreneur can offer these products together for an attractive price, menus at fast food restaurants, for instance. Perhaps the hospitality entrepreneur notices that few drinks are being sold. He can then put together a menu that includes them. He thus links the sales of a less attractive product to the sales of a successful one. A hospitality entrepreneur will only use this strategy if the extra sales of the less successful product will bring in sufficient gross profit. The entrepreneur thus makes optimum use of the consumption relationships in his range. Fast food restaurants are not the only ones to use this strategy. In traditional restaurants, you often see wine offered together with a three or four-course menu. Coffee and cake are often sold together. Hotels often work with tour operators. Their product is then offered in a package together with flights and car hire. 157

Marketing & Sales for the Hospitality Industry Psychological pricing Consumers have a certain perception of prices. They may find the product or service expensive or cheap, or may not have an opinion at all. One way to convince consumers to buy is to give them the impression that something is cheaper than it really is. This gives them the feeling that they are getting a bargain and thus makes them more likely to buy. We call this psychological pricing.Psychological pricingINKIJKEXEMPLAAR ©SVH A well-known form of psychological pricing is to choose a price just below a round number, so asking €14.90 for a dish rather than €15. Offers such as ‘four for the price of five’ make people feel they are getting a bargain, as does ‘was-now’ pricing. The price has been reduced, so the customer feels he simply must buy the product. Prestige price At the opposite end of the scale, psychological pricing is used for articles that consumers buy for status reasons. The supplier must keep his price for these articles above a certain minimum. We call this higher price a prestige price. Consumers are prepared to pay this higher price if there are significant differences in the quality of various products. The product in question must also be visible to the groups that the consumer wants to make an impression on.158

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Marketing & Sales for the Hospitality Industry SkimmingINKIJKEXEMPLAAR ©SVHPricing strategy for new productsThese hotels only start to make a profit if Skimming strategy What should an entrepreneur do when they achieve a constant high occupancy bringing a new product to market? Ask a rate. A well-known example is the FormuleMarket penetration high price to quickly recover the develop- 1 chain. ment costs or ask a low price to quickly win a market share? The entrepreneur can also choose the high- est possible introduction price. This is called His decision depends on which market he skimming. By choosing a high price, the wants to enter. If demand for this product entrepreneur capitalises on his head start on is price-sensitive, the entrepreneur can best the competition. However, there must be a choose a low introduction price, because market or sub-market that is willing to pay his production and distribution costs will the higher price and is thus not sensitive decrease as sales increase. This is called to price. This is the case with high-quality market penetration. tech products. Many tech products, such as smartphones and tablets, are brought to An additional benefit is that a low price will market at a high price. scare off potential competitors. The aim is to conquer a large market share. Once he High prices make the market attractive to has a large market share, the entrepreneur new suppliers. As new suppliers emerge, the can benefit from large-scale production. The entrepreneur must reduce his price. He thus market penetration strategy only works with keeps reducing his price until he reaches mass products, because the development a price that is acceptable to a new market costs of the new product will only be or sub-market. He earns the maximum recovered in the long term and only if sales possible turnover in each sub-market. The are high. entrepreneur thus skims the market. Examples of market penetration can be found in products that meet our basic needs (sandwich fillings, soap and beer). Market penetration also occurs in the hotel industry. Some hotel chains use a low pricing strategy to penetrate a market and attract a certain target group.160

Chapter 6 | Price (strategy)The governmentINKIJKEXEMPLAAR ©SVH Excise duties and VATThe hospitality operator can devise the The authorities have the most influencebest strategies to increase his turnover, but on the prices that a hospitality operatorhe must take into account external factors can ask through VAT and excise duties.that will influence his pricing. For instance, VAT is imposed on almost all products.the government can influence his pricing The authorities have the most influence onthrough the Prices Act (Prijzenwet). The the prices that a hospitality operator canPrices Act enables the government to set ask through VAT and excise duties. VAT isa minimum or maximum price for certain imposed on almost all products.goods or services. It can use this if thisproves necessary for economic or social The authorities distinguish betweenreasons. products that are a basic necessity and those that are a luxury, and applies differentCompetition law rates to these. For the hospitality operator,Competition law gives national or European this means that he must charge a differentauthorities more influence on economic VAT rate for food than for drinks.life. It enables the authorities to preventconcentrations of power. The Dutch The Dutch government imposes excisegovernment intervened in the planned duties to try to influence consumptionmerger between Rai in Amsterdam and patterns. Products that it considers to beJaarbeurshallen in Utrecht, because it bad must be more expensive than productsbelieved that if these companies merged that it considers to be healthy. Alcohol andthey would dominate the conference cigarettes are examples ofmarket. It decided that this was not products that become much moredesirable and thus prevented the merger expensive once excise duties are imposed.from going ahead. It should also be noted that the Dutch government also imposes excise duties onCompetition law is also a way to prevent sugar and consequently on soft drinks.competitors from fixing their prices. Ifcompanies reach such an agreement,they form a monopoly. Monopolies areprohibited in the Netherlands and Europe. 161

Marketing & Sales for the Hospitality Industry 6.4  |  Price discrimination and price differentiation It may seem obvious to charge everyone who wants to buy a product the same price, but this is not the case in practice. There are reasons for entrepreneurs to charge different guests different prices. They often do this by giving discounts. For instance, some hospitality entrepreneurs give loyal guests a discount. If a hospitality entrepreneur charges different prices for the same product this can be in the form of: • price discrimination; • price differentiation.INKIJKEXEMPLAAR ©SVH Price discriminationPrice discrimination Price discrimination is to charge different guests or groups of guests different prices without there being any clear cost differences. The entrepreneur discriminates between his guests. He can only do this if: a. there are different market segments and some are more sensitive to pricing than others; b. the different market segments respond differently to marketing activities; c. these markets are noticeably different. The entrepreneur can charge different prices to different groups of customers on the basis of: 1. The market segment Different market segments are charged different prices. In the hotel market, corporate guests are less sensitive to price differences than the tourist guests. A hotelier can charge the tourist market lower prices, thus also attracting price-sensitive tourists. The hotelier can use intermediaries, which makes the price difference less obvious to the corporate guest. By using price discrimination, the hotel can achieve a higher occupancy rate and thus a higher turnover. Some fast food restaurants have special (cheap) menus for children.162

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Marketing & Sales for the Hospitality Industry 2. The time Many hotels give a discount on rooms at the weekend in order to ensure a constant occupancy rate. It is also often cheaper to stay in a hotel in quieter months. The entrepreneur discriminates on time here. He uses attractive pricing to achieve a more constant occupancy rate. A high occupancy rate can be expected from the corporate market from Monday to Friday in the months of April, May, June, September, October and November. During this period, a maximum room price can be achieved on a number of days of the week. Many pizza delivery companies have special offers on certain days of the week to increase sales of a certain product. Some restaurants let you eat cheaper before six in the evening.INKIJKEXEMPLAAR ©SVH Price differentiationPrice differentiation Price differentiation means charging different prices to different guests or groups of guests because the costs differ. Like price discrimination, this pricing strategy can only be used if there are different market segments. These must be markedly different and must respond differently to different marketing tools. The ways in which price differentiation can be applied are similar to price discrimination. If the conditions above are met, the entrepreneur can charge different prices to different groups of customers on the basis of: 1. Where the product or service is provided A football match and the result is no different for someone in a business seat than for someone in the stands, nor is the destination of a journey any different if you travel first or second class. In both examples, the entrepreneur can charge more for a seat by providing more comfort. The difference in cost means that there is price differentiation, but as these buyers are generally not sensitive to price, price discrimination can be used to make the price much higher. It is customary abroad to charge more for a drink at a table outside than for the same drink at the bar. Hotels charge more for a room with a view than for one without. 2. Product variation By offering different versions of a product, the entrepreneur can charge different prices. This could mean different rooms in a hotel or different types of hamburger in a fast food restaurant. Restaurants offer both luxury and simple salads, which differ more in price than in cost. The entrepreneur uses different products and prices to win different market segments.164

Chapter 6 | Price (strategy)Yield management Yield management Pricing strategy Yield management is a method of limiting the capacity problems of a hospitality business. It seeks an equilibrium between filling the available capacity and asking the highest possible price. It is therefore selling the right product to the right guest for the right price at the right time. If a hotel expects a high occupancy rate in a certain week, it charges the maximum price and if it expects a low occupancy rate in another week, it charges a much lower price. This ensures that it has a good occupancy rate. Yield management is a strategy designed by the aviation industry to optimise turnover. It is based on the economic principles of supply, demand and pricing strategy. The system is often used by hotels and travel agents, but can also be used by venue-hire companies and restaurants. We mainly see yield management in sectors with high fixed costs, low variable costs, a relatively fixed capacity and a transitory supply. In practice, this means that prices are chosen on the basis of predicted demand. Consumers who are sensitive to price and are prepared to visit outside peak hours can thus benefit from special prices, whereas consumers who are not sensitive to price can thus be served during peak hours.INKIJKEXEMPLAAR ©SVH 165

INKIJKEXEMPLAAR ©SVHMarketing & Sales for the Hospitality Industry Yield management This pricing strategy is based on costs, market demand and competition. Market demand can fluctuate because of different groups of buyers in the market and seasonal influences. As the service offered cannot be stored, capacity management systems are used to make optimum use of the capacity of a hotel or restaurant. Capacity management therefore reduces capacity problems. 1. If the capacity is insufficient (the demand is too high and/or the supply to low), the entrepreneur can do the following: • use part-time staff; • maximise efficiency; • increase the guest’s participation in the service process. 2. If the capacity is too great (the demand is too low and/or the supply too high), the entrepreneur can do the following: • use differentiated pricing; • stimulate demand outside busy periods; • provide complementary services (e.g. theme nights); • develop a reservation system.166

Chapter 6 | Price (strategy)INKIJKEXEMPLAAR ©SVHGroup discountPricing and distributionNon-cumulative volume Manufacturers want to encourage intermediaries to buy as much as possible from them. discount They use price differentiation to make a product more attractive. Manufacturers offer discounts to wholesalers, and wholesalers offer discounts to retailers and hospitality Cumulative volume entrepreneurs. There are number of common trade discounts. discount 1. Group discount or non-cumulative volume discountEarly payment discount If someone purchases large quantities at a time or uses hospitality facilities with a whole group, they are often given a discount. As the entrepreneur’s costs decrease if he sells large Credit surcharge quantities, he can therefore charge lower prices. If you buy large quantities, you may be given a non-cumulative volume discount. In the hospitality industry, this discount is known as a group discount. 2. Cumulative volume discount A non-cumulative volume discount is given if the customer buys large quantities of one product. A cumulative volume discount is given if the customer buys a lot throughout the year. This discount often increases as the volume does. If the customer purchases goods worth €200,000, he receives a 2% discount and if he buys goods worth €400,000, he receives a 5% discount. It is difficult to decide by how much and at which volume these discounts increase. A cumulative volume discount applies for a specific period and is calculated afterwards. This is another difference between a cumulative volume discount and a non-cumulative volume discount. 3. Early payment discount Many suppliers want customers to pay in cash or within a certain term. If customers buy on credit, there is always a risk that they will pay too late or not at all. To prevent this, suppliers give discounts on cash payment or payment within two weeks of the invoice date. 4. Credit surcharge The opposite of an early payment discount is a credit surcharge. Here a surcharge is imposed if the customer pays on account or with a credit card. 167

INKIJKEXEMPLAAR ©SVHMarketing & Sales for the Hospitality Industry 6.5  |  Questions about the chapter Answer the question and then find the answer in the chapter. 1A In your own words, explain what the owner of a restaurant must consider when using the marketing tool of price. 1b List ten important points. 2 A number of factors influence the price of a product. Circle which ones are influencing factors. a. Business formula b. Quality level. c. Cost level. d. Trend factors. e. Gross profit. f. Target group g. Competition h. Social media 3 The hospitality entrepreneur must set his prices in one way or another. In practice, we see that hospitality entrepreneurs base their prices on three principles. Which methods do they use? a. Cost-led methods, competition-led methods, demand-led methods. b. Competition-led methods, guest-led methods, employee-led methods. c. Cost-led methods, margin-led methods, do-what-you-want methods. 4 What is the cost of goods sold? a. The sum of all the costs that can be attributed to a product. b. The sum of all the costs of the company. c. The sum of the income from the guests. 5 Give examples of the terms price range, full-line pricing, price lining, product bundling and psychological pricing. 6 Price discrimination is: a. To charge different groups of guests different prices without there being clear cost differences. b. To pay the same prices to different suppliers for the same products. c. To charge different prices to different types of person, for instance people of different nationalities.168

INKIJKEXEMPLAAR ©SVHChapter 6 | Price (strategy) 7 What is the difference between price discrimination and price differentiation? a. Price discrimination is to charge different groups different prices without there being clear cost differences. Price differentiation is to charge different prices to different groups of guests because there are cost differences. b. Price discrimination is to charge different prices to different ethnic groups. Price differentiation is to charge different prices based on the age of the guest. c. Price discrimination is to charge different groups different prices, because there are cost differences. Price differentiation is to charge different groups different prices, without there being clear cost differences. 8 Give an example of when a hotel would apply price discrimination based on market segment. 9 Give an example of when a hotel would apply price discrimination based on time. 10 Provide examples of the following trade discounts: non-cumulative volume discount, cumulative volume discount, early payment discount, credit surcharge. 169

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Chapter 7 | Promotion & social mediaChapter 7Promotion & social media The chapter at a glance 7.1 Introduction  7.2 Communication mix 7.3 Promotion budget  7.4 Personal selling 7.5 Promotion 7.6 Public relations 7.7 Advertising 7.8 Media choice & social media 7.9 Questions about the chapter INKIJKEXEMPLAAR ©SVH 174 175 176 179 180 182 186 188  199 208For more information, questions, answers and supportingmaterials: www.masaho.nl 173

Chapter 7 | P romotion /Social Media as a Market-ting Tool Marketing and Sales for the Hospitality Industry part 2XINKIJKEXEMPLAAR ©SVH Communica- tion mix Media choice Social media Promotion Advertising Promotion www.masaho.nl - Questions: e-mail to [email protected]

Chapter 7 | Promotion & social media 7.1  | Introduction Promotion is a special marketing tool because it is based on the other marketing tools. The tools of the hospitality mix give particular shape to a business formula. Promotion must ensure that this business formula is communicated correctly to the outside world. Promotion brings guests into contact with a business causing them to develop a certain image of the company. It is only when they visit the company that they truly become familiar with the business formula. The expectations created by promotion must match what the business can do.INKIJKEXEMPLAAR ©SVHPromotion Many entrepreneurs make the mistake of understanding this tool to mean advertising only. Promotion consists of much more than advertising alone. It includes all communication that directly or indirectly promotes sales. Some famous marketing experts therefore do not talk of the marketing tool of promotion but of the marketing tool of communication. They think that the term communication better expresses what it is about: communicating with the target group and other groups within society. A hospitality entrepreneur must communicate with many more groups of people than the guest alone. He also has to deal with the public, the press, local residents, the municipality, competitors and more. The communication process was explained in Chapter 4 ‘Personality’. You will also find more information there about personal selling. It is worth taking another good look at those sections before you study this chapter. Active brand awareness The entrepreneur uses communication to build active brand awareness of his product.Passive brand awareness Brand awareness can be active or passive. Active brand awareness means that respondents can spontaneously name the brand when asked for an example of a product type. Passive brand awareness means that respondents cannot name the brand spontaneously but do recognise it when shown it. Consumers will always buy those products that they are actively aware of. The entrepreneur also wants to increase the usage rate among users. There are four categories of usage rate: 1. non users; 2. low users; 3. medium users; 4. high users. The entrepreneur will use communication to try to move his users to a higher category. 175

Marketing & Sales for the Hospitality Industry 7.2|Communication mix A business cannot exist without communication. A hospitality entrepreneur must communicate not only with his target group, but also with groups such as suppliers, local residents, the municipality and the press.INKIJKEXEMPLAAR ©SVH He can communicate with the target group and other groups in various ways. The target group means the group of guests on which the hospitality entrepreneur focuses his business formula. Communication mix The communication mix is divided into four groups of activities. These are also calledCommunication tools communication tools. 1. Personal selling Individual communication with the guest. 2. P romotion Short-term techniques aimed at guests, intermediaries and the sales staff. 3. Public relations Communication with all relevant groups in society. 4. A dvertising Paid non-personal communication that has a clear sender. The possible uses of these four communication tools are described in sections 7.4, 7.5, 7.6 and 7.7. It is recommended that the hospitality entrepreneur draws up a plan each year specifying the goals that he wants to achieve for each communication tool, how he plans to achieve these and what this will cost. It is important not to see these four tools as separate entities. The message of the communication mix must be clear. This plan together with the communication mix forms the promotional plan.Promotional plan Developing the communication mix In the promotional plan, the hospitality entrepreneur must consider how to develop the communication mix. Does he want to use personal selling to reach his target group or will he mainly communicate with them through advertising? The communication mix depends on: 1. The business formula The activities that will be used in the communication mix mainly depend on the business formula. An entrepreneur with a fast-food restaurant will never use personal selling to approach his target group. This is too expensive and time-consuming.176

INKIJKEXEMPLAAR ©SVHChapter 7 | Promotion & social media A fast-food restaurant needs large numbers of guests. This entrepreneur will mainly want to use advertising in order to reach a large audience. The location of the business also influences the communication needed to reach the target group. A sandwich shop in the town centre will need to advertise less than a pancake restaurant in the middle of the woods. 2. The type of market Corporate guests are reached in a completely different way from tourist guests. It is worthwhile for a conference centre or corporate hotel to send a sales manager to a big business (potential client). This personal approach is more expensive than a mailing, but is more likely to be successful. If a bistro wants to attract more guests at the start of the week, it can, for instance, use special offers (promotion). 3. The product life cycle Which phase is the product in? A new product in a new market requires different promotional activities from a product that a large group of people are already familiar with. When pizza companies had just started delivering, they made sure that everyone came into regular contact with the possibility of having a pizza delivered at home. People needed to be made familiar with the telephone number and name of the company. The pizza companies did a lot of advertising in the form of leaflets and flyers. Nowadays they have much more limited advertising activities. Their customers are already familiar with the product and name of the company, so an online advert suffices. 4. The buyer decision process Does the guest still need to be intensively targeted to encourage him to visit the hospitality business? Or is a small nudge all that is needed to get him through the door? The hospitality entrepreneur will adjust his communication mix accordingly. If he feels that the guests are positive about him and are only held back by a few last doubts, he can use promotion to give them a nudge in the right direction. 177

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Chapter 7 | Promotion & social media 7.3|Promotion budget Many entrepreneurs find it difficult to decide how much money they have available for promotion. However, they do need to estimate how much the implementation of a certain plan will cost. In practice, five methods are used to set the promotional budget.INKIJKEXEMPLAAR ©SVHPromotional budget Five methods 1. Percentage of sales The entrepreneur sets his promotional budget by taking a percentage of the previous year’s turnover or the expected turnover for the present year. In the catering sector, it is customary to spend up to two percent of the turnover on promotional activities. 2. Competition-led Hospitality entrepreneurs keep a close eye on each other. Big companies know exactly what their peers are spending on promotion. The amount that the competition spends on promotion can serve as a basis for the hospitality entrepreneur’s budget. 3. What can you pay? The hospitality entrepreneur tracks his income and expenditure in his books. If he has somewhat more money available, he can also spend more on promotional activities. 4. Intuition Some hospitality entrepreneurs rely on their intuition and experience when setting their promotional budget. They will spend more on promotional activities in lean times. This is a logical conclusion, but it does cause financial problems, because where will the entrepreneur get the money from? We call this countercyclical budgeting. 5. The goal and task method Here, the entrepreneur specifies his promotional budget as follows: a. He defines the goals. b. He decides which tasks and activities he must carry out in order to achieve these goals. c. H e estimates what these tasks and activities will cost. His promotional budget is the sum of these costs. The entrepreneur calculates his expected extra turnover if he implements the promotional plan. He can then decide whether or not to proceed with the plan. Before he decides on his communication mix, it is important that the hospitality entrepreneur has some idea of what he can spend on communication. 179

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Chapter 7 | Promotion & social media 7.4  |  Personal sellingPersonal selling Personal selling is an important marketing tool for all hospitality businesses. Personal selling is the sale of goods and/or services through personal contact with guests. As the hospitality sector is a service industry, there is a lot of contact between staff and guest. Such a contact moment can be used to draw the guest's attention to certain products in the range.INKIJKEXEMPLAAR ©SVHSales arguments A significant advantage of personal selling is that there is interaction between the staff member and guest. The staff member can thus respond to the signals that he receives from the guest. If the staff member is trying to sell something, he will always seek selling arguments. Selling arguments are reasons for the guest to purchase something. During a sales talk, the staff member can discover the purchase motives of the guest. The staff member can use this information to provide the right advice. The promotional plan must state what the hospitality operator wants to achieve with personal selling. Personal selling goals often relate to increasing the average spend per guest. The hospitality entrepreneur must specify how he wants to achieve this goal. He could provide sales training, for instance. As the staff turnover rate is high in the hospitality industry, it is important that the entrepreneur provides annual sales training and possibly sommelier training too. 181

Marketing & Sales for the Hospitality Industry 7.5  | PromotionSales promotion The aim of sales promotion is to increase turnover in the short term. The hospitality entrepreneur can achieve this in various ways. He can encourage his staff to achieve a certain turnover or sell certain products. Alternatively, he can focus on the guest and entice him to visit the business or to spend more during this visit.INKIJKEXEMPLAAR ©SVH In his promotional plan, the entrepreneur states which goals he wants to achieve using short-term techniques. For instance, he can aim to increase his occupancy rate at the start of the week or to boost sales of a certain dish or drink. The entrepreneur then states how he wants to achieve these goals and what this will cost. He can look afterwards at whether the promotion was effective. Encourage staff sales In hospitality businesses, the staff who are in contact with the guests are very influential. They have a sales talk with the guest, and their advice can influence what the guest spends. The entrepreneur can benefit from this.Sales force promotion For instance, wine sales in his restaurant may not meet his expectations. He can boost sales by offering his staff a bonus if they sell 20 more bottles of wine per week. These techniques that the entrepreneur uses to temporarily increase his turnover by encouraging his staff to sell more are called sales force promotion. their advice can influence what the guest spends.182

Chapter 7 | Promotion & social mediaTrade promotion Trade promotion Pull strategy There are various ways that a manufacturer can ensure that his products end up with the consumer. He can use advertising to focus directly on the consumer. He thus creates Push strategy demand in the consumer, who will request the product from the retailer. If enough consumers ask the retailer for the product, he will buy it from the wholesaler and so on. This form of distribution is called pull strategy. Through his advertising, the manufacturer ‘pulls’ the consumer to him through the supply chain. The manufacturer can also persuade a link (wholesaler) below him in the supply chain to buy the product. If there is enough stimulus to sell the product, the wholesaler will make a significant effort to sell it. This strategy is called push strategy. The manufacturer pushes the product through the supply chain to the consumer. If the manufacturer wants to use push strategy, he must devise ways to motivate the wholesaler to make an extra effort to sell the product. The wholesaler will want to encourage the retailer or hospitality entrepreneur to sell the product. This sales encouragement is classed as trade promotion: encouraging intermediaries to buy and sell the product on a larger scale. Trade promotion can comprise extra margins, large gifts and trade fair offers. A wine merchant can encourage a hospitality business to buy a certain number of bottles of wine by offering a wine course or trip if it purchases a certain number of bottles.INKIJKEXEMPLAAR ©SVH 183

Marketing & Sales for the Hospitality Industry Consumer offers The hospitality entrepreneur can focus his promotion on the guest. This promotion concentrates on the action element of the guest's attitude. The hospitality entrepreneur wants to change the guest’s behaviour in the short term.INKIJKEXEMPLAAR ©SVHConsumer promotion There are three different types of consumer promotion that a hospitality entrepreneur can use: 1. Money Giving a discount. A restaurant has a special offer where one person in a party of four eats for free (or a 25% discount). 2. Goods A fast-food restaurant gives away a free item on the purchase of another one. A guest receives a free bottle of wine when he books a table at a luxury restaurant. 3. Prizes A fast-food restaurant gives its guests a scratchcard when they purchase a meal offering prizes ranging from a free product to the grand prize of a car. In a bar, for one euro you can choose an envelope containing various drinks ranging from a glass of water to an expensive mixer. Typical examples of promotion in the hospitality industry are theme nights in discos and special prices in off-peak hours (in hotels and restaurants).Merchandising Guests are also very sensitive to seeing products. See it, buy it is what they term it in retail. In retail, you therefore see lots of visual merchandising. Merchandising is all forms of consumer promotion that take place at the place of purchase and is of a temporary nature. This could be product demonstrations in a supermarket. Merchandising can also have an effect in the hospitality industry, for instance the introduction of a new drink or dish. Money, Goods, Prizes.184

Chapter 7 | Promotion & social mediaRelationship marketing Relationship marketing It can be effective for a hospitality entrepreneur to build up a good relationship with his returning guests. In marketing this is called relationship marketing. The hospitality entrepreneur must invest in loyal guests. In traditional marketing, the emphasis lies on individual sales, with a single contact moment with the guest. As it is expensive to attract new guests, it is better for the entrepreneur to focus on maintaining a relationship with loyal guests. There are various ways in which he can try to establish a relationship with his guests. For instance, a mailing informing his regular guests of new developments in the company, such as a new manager or menu. The business will welcome regular guests in a way that makes them feel at home. The staff must know the names of this select group. A hospitality entrepreneur could create a database that notes exactly what the guests consume and how much money they spend. He could also note the birthdays or special anniversaries of the guests. He could then surprise guests who come for a meal on their wedding anniversary each year with a bunch of flowers or a free glass of wine.INKIJKEXEMPLAAR ©SVH 185

Marketing & Sales for the Hospitality Industry 7.6  |  Public relationsPublic relations The aim of public relations is to generate a positive image of the business in all relevant groups in society. This is the aim of the PR department in larger hospitality businesses. But PR can also be very important for smaller hospitality businesses.INKIJKEXEMPLAAR ©SVH If noise from a night club disturbs the neighbours, the club must try to promote mutual understanding. Not taking much notice and allowing the neighbours to complain and go to court can be counterproductive for the hospitality entrepreneur. Many hospitality entrepreneurs have lost their licence when disaffected neighbours have taken them to court and won. It can be much more effective to communicate with the neighbours and to try and find solutions to problems. The PR department Large hospitality businesses often have a separate department that does the company’s PR. The PR department maintains a relationship with the press. It is important that the staff from the PR department are aware of all that is going on in the company. They ensure that the company gets publicity. The PR department is there to support the management team. It is also responsible for the business’s internal and external communication. Sponsoring Every year hospitality entrepreneurs are asked multiple times if they want to support a certain group of people. Sports clubs, wine societies, the local brass band and student societies can all ask for sponsorship. The hospitality entrepreneur will have to consider which groups are of interest to him to sponsor and whether he actually wants to sponsor them. A big advantage of sponsoring is that it can lead to free publicity. A bar owner who sponsors the local football club can suddenly receive a lot of attention if the team wins the league and appears in all the regional papers. The entrepreneur also creates goodwill (image) with this type of activity. The group that he sponsors will speak favourably about him and hold regular events at his hospitality business. The advantage of shirt sponsorship is that you create walking billboards. This is also a danger if the club does anything stupid, such as fighting on the pitch. Sponsoring can have a very good effect on the company's PR. The entrepreneur will be invited to attend certain activities where he can network.186

Chapter 7 | Promotion & social media PR planPR plan A PR plan is also part of the promotional plan. The hospitality entrepreneur must state what he aims to achieve with PR. He will find this aim most difficult to express, because PR clearly has an indirect goal. The entrepreneur then states which activities he wants to use to achieve his goals and what these are going to cost.INKIJKEXEMPLAAR ©SVHExternal public relations External PR External PR is about creating the best possible image of the company. The entrepreneur or a member of the PR department will need to be in contact with not only the press, but also suppliers, the competition, the local authorities, unions and the public. Advertising, personal selling and promotion are all about what is sold. With PR, a company wants to create an image that matches the image generated by the business formula. This form of PR can take the shape of guided tours, open days, newsletters and press releases. A hospitality entrepreneur can improve the image of his company by organising events. This is on the condition that the image of the event matches the image - or intended image - of the company. A bar can, for instance, hold a football tournament for regular guests and other hospitality businesses in the town. Publications can also strengthen the business’s image. Numerous chefs have published a cookbook and thus worked on the image of their business. Other tools that can be used include newsletters, talks, participating in competitions and supporting charities. Simple PR tools for a small hospitality business include: • providing information about the business’s philosophy on the menu; • providing a newsletter for regular guests about what is going on or changing in the business; • providing a leaflet with information about the premises or surrounding area; • giving guests a small gift when they leave the business together with information about upcoming activities.Internal public relations Internal PR The aim of internal PR is to maintain a good relationship with staff. Production and consumption come together in the service provided. All contacts that the guest has with the hospitality business affect his impression of the business. The staff must be aware of the aims of the entrepreneur or manager. Internal PR can be used to ensure that the staff pursue the right strategy. The entrepreneur/ manager can achieve this with: internal newsletters, talks and publications and by pursuing effective internal marketing. 187

Marketing & Sales for the Hospitality Industry 7.7  | Advertising Advertising Advertising is a form of mass communication that is paid for by a recognisable source and aims to increase sales. The Dutch word for advertising, reclame, comes from the Latin 'reclamare’ and means to shout loudly. Whoever shouts loudest gets the most attention.INKIJKEXEMPLAAR ©SVH Advertising tries to attract the consumer’s attention in order to sell a certain product or service. Advertising always has an aim and a purpose. The purpose of advertising is to communicate with the target group to promote sales. Before the target group decides to buy a product, advertising must first increase their awareness and knowledge of it. Then it can increase the appeal of the product or business, causing a purchase preference and the decision to buy the product. Does advertising really work? Very little research is conducted into the effect of advertising in the Netherlands. This is surprising, because some 65,000 people work in the advertising sector. Just under €2 billion is spent in the Netherlands per year on advertising in various media. The total cost of advertising is about €6 billion per year. The few studies that are conducted each year into the effect of advertising always focus on whether a campaign is effective. It remains a conundrum why one campaign works whereas the other does not. The objectives of the specific advertiser determine whether an advertising campaign is successful. A successful campaign does not necessarily lead to more sales. An advertiser can also have other goals, such as increasing brand loyalty or awareness or creating a certain image. In the advertising sector, a prize is awarded each year for the most effective TV advert, ‘de Effie’. But this does not look at the effect on the market but rather at the artistic value of the advert and whether it is memorable to consumers. The Pampers and Always ads have never won the Effie and can definitely not be termed creative or artistic gems. But these brands have been market leaders with a large market share for years. For a company it is important to choose effective advertising rather than a campaign that the management team happens to like.188

Chapter 7 | Promotion & social media Goals Advertising always has a goal. This goal is formulated when the communication mix is developed. Important goals are:INKIJKEXEMPLAAR ©SVH1. Achieving a certain percentage of awareness in the target group. 2. Stimulating purchase preference. 3. Creating a certain image. The hospitality entrepreneur must make his goals as specific as possible. The more specific the goals, the easier it is to ascertain whether he has achieved them.Advertising plan With his advertising goals, the entrepreneur specifies the effect he wishes to have on the behaviour of the target group. An advertising strategy specifies how the goal will be achieved. An advertising plan puts on paper how this strategy will be implemented in the coming financial year. Research must establish whether the goals have been achieved. At the end of a budget period, a business will investigate the effect of the communication mix that it used. It can then devise a new plan, incorporating any necessary improvements. It will need to investigate whether brand awareness has increased, whether the attitude of the target group has changed and which impression the target group has of the company’s product/service. 189

INKIJKEXEMPLAAR ©SVHMarketing & Sales for the Hospitality Industry Why some people love adverts Why do some TV viewers like adverts more than others? This is related to time orientation. Consumers who like to look to the past are less open to TV adverts than those who look to the present or future. Advertisers and researchers have wanted to find out for years why some viewers are more likely to grab the remote control when the ads come on than others. Research has revealed that a rarely used segmentation criterion plays an important role in this: time orientation. People who base their attitudes on the past have little interest in the news that TV adverts have to offer. Consumers who feel greatly involved in the present are by nature more interested in advertising, on TV or elsewhere. The same is true for people who are future- oriented: they too want to know what kinds of change are afoot. Advertising is and will continue to be an important source of information for new trends. Time-orientation segmentation can help advertisers choose the right media. A news programme is more likely to attract viewers who are open to TV advertising than a nostalgic TV series. So it can be a good idea to have your commercial screened during the former, even if the TV series has a higher audience share. Source: Journal of Advertising This summary comes from Marketing International, our monthly collection of the most important marketing news from abroad. Advertising is and will continue to be an important source of information for new trends.190

Chapter 7 | Promotion & social mediaAdvertising planAdvertising is part of the communication mix. The promotional plan must state which goal theentrepreneur wants to achieve with the tool of advertising. If he formulates clear goals it will beeasier to evaluate whether he has achieved them afterwards.Once the goals have been determined, the advertising plan covers the following topics:INKIJKEXEMPLAAR ©SVHAdvertising goal and advertising plan Business goal Advertising goal Advertising plan What? Who? Business goal Where? Marketing goal When? Business goalMarketing concept With what? How?Who will the advertising be aimed at? Target groupWhich message will we communicate? MessageIn which form will we communicate the message? HowHow often will we communicate the message? FrequencyThrough which media will we communicate the message? Media selectionHow much money do we have available? BudgetHow will we measure the effect and how will we proceed further? EvaluationBy discussing these topics in the advertising plan, the entrepreneur tries to provide a thoroughexplanation of the advertising budget. He also tries to use his communication tools as efficientlyand effectively as possible. 191

Marketing & Sales for the Hospitality Industry Who will the advertising be aimed at? A hospitality entrepreneur can aim his advertising at existing guests or potential new guests within the target group. If the marketing aim is to encourage guests to visit again, the advertising and promotional activities will be aimed at existing guests. These activities belong to the deeper market penetration marketing strategy.INKIJKEXEMPLAAR ©SVH If the marketing goals are aimed at potential guests within the target group, we call this wider market penetration. The entrepreneur will primarily want to increase awareness of his brand and will focus on bringing about a purchase preference.Advertising theme Which message do we want to get across? If the hospitality operator wants to appeal to the guest’s awareness and emotion, he will choose themed advertising. This enables him to emphasise the image of the business formula and cause the guest to develop a purchase preference. Themed advertising is most effective if a slogan or message is repeated over a long period of time. It is often suggestive.Call to action advertising In his advertising the hospitality entrepreneur will want to appeal to an aspect of the guest’s attitude. If he wants to focus on the aspect that persuades the guest to take action, he will choose call to action advertising. Call to action advertising aims to get the guest to visit and has a turnover goal. It can be effective in the short term already. In which form do we want to get the message across? The form of the message must attract the attention. This is necessary, because the consumer’s perception is selective. The advertising message must stand out from all the other advertising messages. The form can vary in format (size of an advert or duration of a TV advert), whether it is colour or black and white, whether it is text or an image, in printing technique/typeface/layout, in moving or static images and whether it uses sound. With printed media, the hospitality entrepreneur can choose from an advertisement, a brochure (or leaflet) or a poster.Advertisement feature If he chooses an advertisement, he can choose from an advertisement, a listing in the classifieds, a public notice or an advertorial. An advertisement feature is an advertisement that appears alongside regular editorial content. It is often printed in the same typeface as the newspaper or magazine in which it is printed. An advertisement feature stands out and looks reliable to the reader, but generally costs most to place. An advertorial is a cross between an advertisement and editorial content. Advertorials are often placed in magazines. The header ‘advertisement feature’ must appear above an advertisement feature and 'advertorial’ above an advertorial to make it clear that they are advertisements.192

INKIJKEXEMPLAAR ©SVH Chapter 7 | Promotion & social media Advertisement Advertorial Many hospitality entrepreneurs find it difficult to write an advertisement. It is expensive space in a newspaper or magazine and many entrepreneurs have a lot to say in their advertisement. What are the current requirements of advertisements? There are a number of different aspects to an advertisement. Below are some handy tips for each. However, the most important tip is: keep the advert short and to the point. The time taken to read an advert is expressed in seconds. Remember this if you are writing a text. The headline • The headline of an advertisement is read by five times as many people as the rest of the text. • Never use capitals for a headline. This slows down reading. • The headline must mention the sender already. • The message must be in the headline. • Never place a full stop at the end of the headline: a full stop tells people to stop. Text • Focus the text on the individual rather than a group of people. • Use short sentences and paragraphs. Avoid difficult words. • Do not use comparisons. • Do not exaggerate. • User/visitor testimonials work well. • The first paragraph must attract the attention. • Do not generalise. Illustration • Illustrations must supplement the advertisement. • Photos work better than drawings. • People are more likely to remember colour advertisements. • Never place text over an illustration. General • Discounts and special offers work well. • Always try to mention prices (or give an indication of them). • Readers look at the illustration first, then at the headline and then at the text. • A column width of 40 characters is easiest to read. 193

INKIJKEXEMPLAAR ©SVHMarketing & Sales for the Hospitality Industry How often will we communicate the message? There are two basic rules in advertising: 1. The more noticeable the advertisement, the more likely it is to have an effect. 2. The result depends greatly on repetition. One-offs are not very effective. Repetition is the secret of advertising. Regular advertisements or special offers ensure that you keep the attention of the target group. This repetition is necessary because a consumer never sees the whole advertising message in one go. Nor does the consumer remember what the exact message was after seeing or hearing it just once. An advertising message will penetrate better if it is repeated regularly. How does a consumer respond to an advertisement Market research companies are hired to test a national advertising campaign. They can test the physical reactions of consumers, such as heart rate, blood pressure and eye reflexes. They measure if an advertisement engages the attention. Advertisement campaigns are often evaluated afterwards to see if people remember and recognise them. To evaluate whether a campaign was memorable, consumers are asked if they remember a name, image or melody without any prompts. This shows if they noticed and remembered the campaign. If they did, the advertising campaign has worked. To assess whether people recognise advertisements, they are given some prompts. For instance, they must read a magazine and then say which advertisements they have seen. This test gives an indication of how different market segments respond to the same advertisement. It also gives an impression of whether the advertisement stands out from the competition.194

Chapter 7 | Promotion & social mediaAdvertising mix The advertising mix The advertising mix consists of four topics and is a summary of the advertising plan.INKIJKEXEMPLAAR ©SVH1. The message What are we saying? 2. The form of the message How are we saying it? 3. The frequency of the message How often are we saying it? 4. The messengers Through which media? The advertising mix can help the entrepreneur communicate more effectively with the target group. If you want to communicate properly, you will need to communicate your message in such a shape and form that the recipient can understand it. Through which media will we communicate the message? If a hospitality entrepreneur wants to familiarise his target group with his business formula, a leaflet is generally more effective than a radio advert. If the hospitality entrepreneur wants to draw attention to a certain weekly menu (for instance at Christmas), he should place an advertisement in a local newspaper. Frequently used advertising media are: • Internet / social media; • printed media (newspapers and magazines); • audiovisual media (radio and regional television stations); • outdoor advertising (this could be adverts on buses and cars); • direct advertising (direct mail, leaflet, brochure, flyer); • sponsoring. In section 7.8, we will look in detail at the media channels that an entrepreneur can use. How much money do we have available? We looked at the ways in which a hospitality entrepreneur can set his budget earlier on in this chapter. But as advertising has such a clear goal, the entrepreneur can take a good look at the profits and cost. There is no point in a €5,000 advertising plan if the expected turnover increase is €2,000. The entrepreneur will keep track of the expected value of an advertising activity. The only difficulty for the hospitality entrepreneur is that he does not know what his turnover would have been if he had not advertised. 195

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INKIJKEXEMPLAAR ©SVHChapter 7 | Promotion & social media How will we measure the effect and how will we proceed further? Once the entrepreneur has implemented the advertising plan, he will have to look at the effects of the money he has spent. Earlier on in this chapter we mentioned that the more precise the goal, the more easy it is to establish whether it has been achieved. But it is not easy to measure if you have achieved an advertising goal such as improving your image. If the entrepreneur has not achieved the goal, he will have to find out or make an educated guess at why this is, because this is important for his advertising plan for the next year. It is difficult to establish why you have not achieved a goal. It can be a good idea for the entrepreneur to discuss this with his employees. They often have more contact with guests and a better idea of what may have gone wrong. Word of mouth advertising Consumers find services difficult products to buy. A physical product is tangible and has specific features, whereas a service is a snapshot. Many consumers therefore take advertisements by service companies with a pinch of salt. But if another consumer is positive about a service company, they will believe this straight away and this gives them security. Hospitality businesses are service companies. Many hospitality entrepreneurs notice that new guests have heard about their business from other guests. The phenomenon of word of mouth advertising is very important to the hospitality industry. Word of mouth advertising is a form of communication with high credibility and effectiveness. The only thing is that the entrepreneur has no direct influence on it, because he is not part of the communication process. Word of mouth is particularly important for themed or traditional restaurants that are off the beaten track and is vital for new companies. Do note, however, that people are not only positive about hospitality businesses. It is therefore important that new businesses deal with complaints properly in order to prevent negative stories to a minimum. Research has shown that, on average, people talk about positive aspects of a visit to a hospitality business to three others and about negative aspects to 11 others. 197

Marketing & Sales for the Hospitality Industry Collaborative advertising Entrepreneurs can choose to advertise with others. They are most likely to do so if it there are cost benefits to this. Much mass media is expensive for individual entrepreneurs, but they may have more options if they work together with others. There are different forms of collaborative advertising:INKIJKEXEMPLAAR ©SVHCollective advertising Collective advertising Collective advertising is if businesses in a certain industry advertise together. To do so, businesses can also join a branch organisation such as Alliance Gastronomique. Alliance Gastronomique comprises over 30 traditional restaurants that advertise together in trade journals.Combined advertising Combined advertising Combined advertising is advertising by different types of business that are not direct competitors. For instance, an advertisement by the businesses in a shopping or entertainment centre. This form of advertising is common in regional newspapers, free newspapers and leaflets. Most events are publicised in this way.omplementary advertising Complementary advertising If products complement each other, their providers can also advertise together. McDonalds often advertises together with cinemas. Another example is if a leisure park advertises with businesses offering accommodation in the immediate vicinity. Collective advertising, Combined advertising, Complementary advertising.198

Chapter 7 | Promotion & social media 7.8  |  Media choice & social media A hospitality entrepreneur communicates with many different parties: with potential guests about his business formula, with guests who visit his business about their needs, with local residents, with suppliers, with the press and with any other interested parties. He will use different resources to communicate with these different groups. To begin with, he will try to reach his target group.INKIJKEXEMPLAAR ©SVH A business can use different media to try to reach its target group. This could mean communicating in a telephone call, a letter or a newspaper or radio advertisement. Communication channels (a means of communication) can be divided into personal and non- personal channels.Personal communication Personal channels are conversations held face-to-face or over the telephone With personal Personal channels communication there is always interaction between sender and recipient. The advantage is that the sender gets immediate feedback about the message, because the communication is two-way. Non-personal channels Non-personal channels are newspapers, magazines, billboards, radio, television and also direct mail. Here the sender must make an effort to establish whether his message has come across as intended, because the communication is one-way. All forms of social media have a special place on the list of media channels.Social media Social media means all online spaces where a certain form of interaction takes place. People or businesses are on social media for several reasons. Social media meets a certain need, such as: • keeping in touch with people; • making new friends / contacting old friends; • sharing news / discussing matters; • playing games; • promoting one’s career and/or securing projects; • discovering and sharing information about brands, products and services; • following celebrities/experts; • working with colleagues; • helping people. 199