Inkijkexemplaar_Marketing & Sales for the Hospitality_1

We stand behindINKIJKEXEMPLAAR ©SVH the concept thatanswers to the desires and needs of your guests.

INKIJKEXEMPLAAR ©SVHColophonISBN 9789052112947© Copyright 2015 PlanBoek Uitgeverijwww.planboekuitgeverij.nlMarketing & sales for the hospitality industry - part 1First Edition: 2018Translation: AVB vertalingenPhil Wheeler, ROC MondriaanAll rights reserved. No part of this publication may be reproduced and/or made public by means of print, photocopy, microfilm or any othermeans, without the prior written permission of the publisher.

INKIJKEXEMPLAAR ©SVHMAR KETING & SALES HOSPITALIT Y MARKETING & SALES FOR THE HOSPITALITY INDUSTRY ELLEN VAN KOOTEN 1

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ForewordINKIJKEXEMPLAAR ©SVHThis book is the first of two parts, which together with a project book, videos and website form themethod for Marketing and Sales for the hospitality industry. The current practice in the hospitalityindustry is the guideline. The website www.masaho.nl provides further depth and enrichment andprovides support and visualisation of the topics for students and teachers. This makes the website anexcellent fit for a digital learning environment.Each chapter in this book begins with a brief summary of the subject. These summaries can bedownloaded as Prezis from the website. There are also eight videos available on the website. Theyexplain marketing and sales concepts based on interviews.The theory described in the book can always be tested using control questions. These can be found atthe end of each chapter. The entire theory is made more understandable with pictures, short practicestories, trends and drawings. The terms used are included with a description in an index at the end ofthe book.In addition to the project books, there are additional questions and project assignments on www.masaho.nl.The method supplements the training as a hospitality entrepreneur and is tailored to the mbo-qualifying file Hospitality/bakery entrepreneur (level 4). The method is therefore also suitable for use inthe first stage of higher professional education/hbo (hotel schools).We are open to findings and further suggestions.You can e-mail us at [email protected] 2015Amsterdam E. van KootenZoetermeer SVH

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Table of contentsTable of contentsChapter 11 The marketing concept  The chapter at a glance1.1 Introduction1.2 The wishes of the guest are the main focus point1.3 The entrepreneur1.4 You do not run a business alone1.5 The business concept1.6 Marketing tools1.7 Business formula1.8 The marketing policy1.9 Questions about the chapterINKIJKEXEMPLAAR ©SVH 11 12 13 14 16 19 24 27 30 32 35Chapter 22 The hospitality industry 39 The chapter at a glance 402.1 Introduction  412.2 The hospitality product 432.3 Supply chain and industry 442.4 Manifestations 482.5 The changing consumer  502.6 Changes in hospitality establishments 542.7 Collaboration within the hospitality industry 572.8 Organisations and institutions in the hospitality industry  622.9 Questions about the chapter 67 7

Marketing & Sales for the Hospitality Industry Chapter 3 71 3 Business typesINKIJKEXEMPLAAR ©SVH The chapter at a glance 72 3.1 3.2 Introduction  73 3.3 3.4 Drinking establishments 75 3.5 3.6 Para-commercial82 3.7 3.8 Meal supply businesses  84 Food supply businesses 88 Accommodation establishments  92 Catering  95 Questions about the chapter  97 Chapter 4 103 4 Supply-side analysis of the hospitality market 104 The chapter at a glance 105 4.1 Introduction  106 4.2 The market and supply conditions  109 4.3 Competition strategies  111 4.4 Macro and meso environmental analysis  120 4.5 Facts and figures of the hospitality industry  123 4.6 Conclusions  126 4.7 Questions about the chapter  Chapter 5 131 5 Demand-side analysis of the hospitality market 132 The chapter at a glance 135 5.1 Introduction  141 5.2 Customer groups 149 5.3 Stages of customer behaviour  149 5.4 The buying process in different sales situations  150 5.5 How does a consumer make his choice?  158 5.6 Economic aspects of customer behaviour  158 5.6.1 Price elasticity  161 5.6.2 Income elasticity  163 5.6.3 Cross elasticity  165 5.7 Questions about the chapter 8

Table of contentsChapter 6 1696 Market segmentation   170INKIJKEXEMPLAAR ©SVH The chapter at a glance 1716.1 Introduction  1736.2 How to segment 1816.3 Segmentation analysis 1846.4 Segmentation strategies 1866.5 Market segmentation and product differentiation 1896.6 Customer analysis 1916.7 Questions about the chapter  195Chapter 77 Market research and sales forecast  196 197 The chapter at a glance 1997.1 Introduction  2027.2 Functions of market research 2047.3 Compiling market data 2097.4 Research techniques 2127.5 Market and sales forecast 2187.6 Calculating a sales forecast7.7 Questions about the chapter  221Terms index 9

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Chapter 1 | The Marketing ConceptChapter 1The Marketing Concept The chapter at a glance  1.1 Introduction 1.2 The wishes of the guest are central  1.3 The entrepreneur 1.4 You do not run a business alone 1.5 The business concept 1.6 Marketing tools 1.7 Business formula  1.8 The marketing policy  1.9 Control questions INKIJKEXEMPLAAR ©SVH 12 13 14 16 19 24 27 30 32 35For more information, exercises, answers and supportingmaterials: www.masaho.nl 11

Chapter 1 | The Marketing Concept Marketing and Sales for the Hospitality Industry part 1INKIJKEXEMPLAAR ©SVHBusiness con- ceptCompetition Wishes of The the guest entrepreneurMarketing Business policy formula www.masaho.nl - questions: e-mail to [email protected]

INKIJKEXEMPLAAR ©SVH Chapter 1 | The Marketing Concept 1.1  | Introduction Peter can finally make his dream come true. The local hotel-café-restaurant is up for sale in the village where he lives. The current owner has made a mess of it and now wants to sell as soon as possible. The business has an area of more than 400 m2. The village is near a big city. In addition to the local residents, there are also a lot of commuters. Peter is currently a manager at a bistro in a nearby village. He also really wants to start a bistro here in his own village. The hotel rooms and the large hall could really do with a makeover, but that will have to wait. His first goal will be to get more guests to come to the new bistro. The start of a business Books and the Internet are full of stories about the creation of successful hospitality businesses. It often goes something like this: a person has had the idea to start something for themselves for years and then walks past an empty property and begins to dream. If it were up to me, I’d paint the walls in an earth tone, create a large open kitchen, put a terrace there, serve French-Dutch cuisine and so on. Before he knows it, he’s started his dream business. He rents the property, arranges the permits, chooses the suppliers, hires staff, borrows money from the bank and draws- up the business plan. Not necessarily in that order. Over time, everything looks exactly as he had dreamed. The business is officially opened and is really busy in the first month, but it slows down after that. He has to borrow more money after the first year. After three years, the bank ceases funding and the business is forced to close. A sad but common story. About 35% of cafés close within three years of start-up. This rate is at about 30% for restaurants. Fortunately, there are also some success stories. Think of big companies like McDonald's, Hilton, La Place and Febo. And there are also plenty of small businesses that have successfully run for years. It’s important that you study these failures and the success stories as they relate to the field of marketing. Why didn’t it work for this particular entrepreneur? Why is this company so successful? We try to gain insight into the ins and outs of the hospitality industry. Books and the Internet are full of stories about the creation of successful hospitality business. 13

Marketing & Sales for the Hospitality Industry 1.2  |  The wishes of the guest are central Marketing comes from the words market getting and answers the question: in which market can I sell my products? The golden rule of marketing is that the buyer/consumer determines the success of a company. The consumer chooses where he wants to spend his money. This is called the consumer’s purchasing power In order to attract the consumer’s money to your business, you need to be as well informed as possible about what the consumers want.INKIJKEXEMPLAAR ©SVH Consumer purchasing power Business- Offer Offer formula Consumers can use their purchasing power anywhere. The most attractive offer for the consumer has the best chance to attract their purchasing power. Within the hospitality market, consumers are often called guests. An entrepreneur may, for example, focus on guests who quickly want an affordable and simple meal. Or he may focus on businesses that want a relaxed place to have meetings. Or the entrepreneur focuses on families that have something to celebrate. Of course you cannot meet all needs. You also need to look at what wishes your company can fulfil and the cost of fulfilling those wishes.14

INKIJKEXEMPLAAR ©SVHChapter 1 | The Marketing Concept Top 10 hospitality irritations An entrepreneur is constantly focused on the most important part of the business - the guest. If something irritates a guest, he or she might not return. Here is the check list of irritations. 1 The quality of the service. The staff should be attentive, knowledgeable about the menu and welcoming. 2 Followed by a long wait. The staff must look around. Seek contact with the customers. 3 Next is the quality  and presentation of the food. Guests want an attractive plate of food consisting of high-quality, fresh ingredients. 4 Hygiene. Guests place a lot of importance on the toilets and their cleanliness. So make sure that these are cleaned regularly. 5 People who eat out often complain about children and the nuisance they can cause. Try to seat families close to each other. They have more mutual understanding of the nuisance that children can cause. 6 Make sure that the staff is careful and precise. This is especially important when calculating the bill. All guests expect that proper care is taken regarding the bill (the wallet!). 7 D isturbances caused by other guests. During dinner, the customer does not want to be irritated by noisy groups, anti-social types and other troublemakers. 8 We all want enough space at the table, so annoyance number 8 is tables that are too small. Make sure that the tables are a decent size and properly laid out. 9 We want to pay a fair price for the food. In particular, starters and desserts are sometimes overpriced. 10 It’s irritating for the customer to sit in a draught. It might be smarter to have one less table and thereby create more walking space. Source: www.kenniscentrumhoreca.nl 15

INKIJKEXEMPLAAR ©SVH Marketing & Sales for the Hospitality Industry 1.3  |  The entrepreneur There are many self-employed people active within the hospitality industry. Cafés and restaurants in particular are often run by this type of entrepreneur. The entrepreneur is then usually active in his business and puts his stamp on it. He is often clearly recognisable to the guests and can act as an attraction. Characteristics of an entrepreneur The entrepreneur must have a number of specific characteristics if he wants his business to remain successful in the market. Characteristics of the successful hospitality entrepreneur • A successful hospitality entrepreneur understands what hospitality is and can implement this vision within his business. • A successful entrepreneur sets goals. • Successful entrepreneurs know their strengths and weaknesses. • A successful entrepreneur is always on the lookout for opportunities. • Successful entrepreneurs know where they stand. • Successful entrepreneurs are financially well-grounded. • A successful entrepreneur always wants the best. • A successful entrepreneur enjoys what he does. • Successful entrepreneurs are willing to work long hours. • Successful entrepreneurs ask for help from third parties. An entrepreneur should also not be bothered by uncertainty. He has no regular income, no certainty and takes a risk. The entrepreneur should be in tune with the wishes of the consumer (especially with small-scale businesses). It is an advantage if he easily interacts with his guests. An entrepreneur who really loves his product will put in the effort. The entrepreneur should have the gift of maintaining good oversight. He must be able to view his business from a distance, so to speak, and analyse its strengths and weaknesses. He should also be able to detect the opportunities and threats in the market. The entrepreneur should set business goals and be able to underpin his decisions. It is a good idea for an entrepreneur to also have a hand in the administration. He can outsource this to an administrative office, but he must have insight into the figures. This is how, for example, he can discover that his passion for products is costing too much. The entrepreneur must have knowledge of certain sales figures (e.g. turnover per guest, turnover per square metre or the turnover per man-hour). He can then use these figures to determine what he needs to change in order to achieve a better result.16

Chapter 1 | The Marketing ConceptINKIJKEXEMPLAAR ©SVHFour beginner’s mistakes 3 Insufficient administration Immediately after starting up hisNew entrepreneurs often make the samemistakes. Annoying for them but good for business, a good entrepreneur eagerlythose just starting out. begins working in order to make money. That’s as it should be. Just do notThose who do not make the errors listed forget about the administration. Thebelow have a better chance of success. administration of many young businesses too often consists of a shoe box full of1 The wrong location receipts and invoices. The location and/or the price of the property can cause major problems 4 Forgetting about the tax authorities in the early days and even threaten Many entrepreneurs become quite the survival of the business. Properly determine in advance what is needed optimistic when the sales start to flow for the business premises. You’ll have to after the start up of the business. The take accessibility into account when your money earned is enthusiastically spent or concept mainly focuses on young people reinvested in the business. Getting the between the ages of 16 to 18. first tax assessments in the post (often after a long time) can cause a shock. The2 Insufficient preparation assessments often cover a long period Beginners sometimes forget to ask and therefore involve large amounts. They’re sometimes so much that the themselves the following questions: 'Am entrepreneur is unable to pay the tax I cut out to be an entrepreneur?' and 'On owed and must close. what type of guests will I focus?' 17

Marketing & Sales for the Hospitality Industry An entrepreneur’s responsibilities regarding the marketing and sales policy An entrepreneur usually starts a business with the intention of earning an income from it. This involves risk. For example, the entrepreneur will earn (too) little/less if too few guests visit or the costs are too high. He may also get stressed or worry about having everything run properly in the business. In addition to operational, financial and personnel responsibilities, the entrepreneur is also responsible for the turnover. For example: • create a market analysis; • establish financial policy and determine sales prices; • maintain external contacts; • introduce innovations in the business; • take care of financial administration and registration; • monitor and be accountable for the financial situation; • promote the business, including setting up guest and customer satisfaction surveys; • the entrepreneur carries out commercial activities; • identify and handle complaints; • receive, inform and advise guests; • arrange special packages, parties and orders.INKIJKEXEMPLAAR ©SVH B1-K1-W5: Carries out commercial activities; Description products to improve the market position, image The hospitality/bakery entrepreneur profiles and name recognition of the business. himself positively within his network and positively promotes and presents the business Behaviour in different ways. He uses various activities to • C ollects information from various sources ensure the name recognition of the business. He maintains relevant information through about guests/customers, competitors various media. He keeps up to date on the and important developments and activities and developments at suppliers and innovations in the hospitality industry, fellow competitors. On the basis of information determines the importance of this for the obtained and initiatives of employees, he business and analyses the information. * takes promotional-related decisions such as Recognises opportunities and threats in placing an advert, dispersing promotional order to implement improvement actions, leaflets, vouchers, press releases, having own investments or innovations, and shows website, webvertising, industry fairs, etc. He organisational ability by translating and discusses decisions with employees and carries anticipating opportunities into concrete out improvement proposals in the business proposals and actions. processes. • E  stablishes active contact with people, invests in building and maintaining good Result relationships, and uses networks to obtain Substantiated proposals and decisions on information for the business. improvement actions to be implemented, • M akes a strong and positive impression on investments, new production methods or others. Source: Kenwerk.nl18

Chapter 1 | The Marketing ConceptIt is important to know exactlywhat demands the guest placeson the hospitality product.INKIJKEXEMPLAAR ©SVHTarget group 1.4  |  You do not run a business alone To build a healthy hospitality establishment, the entrepreneur must put the guest first. The entrepreneur will have to choose what type of guests he wants to have in his hospitality establishment. We call this his target group. The type of target group will influence the business. If the entrepreneur chooses young people aged between 15 and 21 as the target group, he will have to set up his business differently than when he has an older target group. It is important to know exactly what demands the guest places on the hospitality product. It is useful for the host or hostess to have insight into the characteristics and requirements of the main guest groups that visit a hospitality establishment. He needs to know why guests use the services of his business. A division into the following three groups is usual: • the business guest; • the leisure guest; • the tourist. The business guest The business guest focuses mainly on how a business represents itself and chooses a business based on these expectations. He pays less attention to the price and more on the quality of the business. Depending on the reason for his visit, the business guest sets specific requirements for the way that hospitality is expressed towards the guests. The leisure guest The leisure guest’s choice of a particular hospitality establishment depends on the reason for going out. He therefore has a wide choice of hospitality establishments. The leisure guest pays attention to the price and quality on offer when choosing the hospitality establishment. Sometimes the price is the reason for the visit, and the low price may be at the expense of service and presentation. In other situations, the atmosphere of the hospitality establishment can be the decisive factor. The tourist The tourist mostly visits hospitality establishments during his stay. Due to the many possibilities in tourist accommodation, price plays an important role in his choice. The informational needs of the tourist as a guest are usually quite large and he generally has enough time to consume at leisure and to experience the entire service process. 19

Marketing & Sales for the Hospitality Industry Searching for the right target groups Every hospitality establishment tries to attract its own public. But how do you make sure that it is the right public? For example, by aligning the atmosphere, music and staff to your target group and to monitor those elements well. The entrepreneur must describe the target group and also think about what other groups provide added value to his business, without clashing with the primary target group. Through the use of atmosphere, lighting and music, the entrepreneur can ‘put off’ the unwanted target group. It is best for the entrepreneur to focus on other target groups at different times of the day. For example, the entrepreneur can focus on shoppers in town during the day and on students in the evening. When an entrepreneur wants to focus on different target groups, it makes sense to keep this in mind when scheduling staff. When employees fit in well with a target group, it creates an additional link between business and guest.INKIJKEXEMPLAAR ©SVH Consumption Consumption circumstances Circumstances A guest’s reason for visiting a hospitality business greatly affects the expectations of the guest and what requirements he places on the hospitality product. The guest also has different requirements if he is alone compared to when he is with someone else or with a group. The assessment of the hospitality product is very personal and highly dependent on the consumption circumstances such as: while shopping, in connection with a visit to the theatre or cinema, going out or a holiday. Consumption circumstances are situations with regards to consuming. The company, the atmosphere in the hospitality establishment, the mood of the consumer, the music, the reason for consuming, basically everything that affects the consumption of the guest. Competition (other providers) The entrepreneur has to deal with many more people than just the guests. Because competitors can also grant the wishes of guests. As an entrepreneur, you will not only have to look at the demand side of the market but also at the supply side. What companies are already located there? What do they charge for a meal? What does their menu look like?20

Chapter 1 | The Marketing Concept Schedule 1: the hospitality market GuestINKIJKEXEMPLAAR ©SVH Hospitality busi- Competition ness Other participants in the market environment In addition to the competition, the entrepreneur also has to deal with the bank where he borrows money. What demands does the bank set? He will have to choose the right suppliers. The entrepreneur will need to apply for permits at the municipality. What rules and regulations does the municipality set? There are also other agencies and groups which the entrepreneur must deal with. Micro level The decisions of the individual entrepreneur are called micro-level decisions. All developments Internal within the hospitality establishment are internal developments. Developments outside the business are called external developments. It is difficult for the entrepreneur to influence externalDevelopments developments. The level of the development determines whether the entrepreneur has some External influence or none at all. For example, the entrepreneur has no influence on national legislative developments. When the local town council must make a decision, the entrepreneur can thenDevelopments speak with the relevant council member. Factors in his immediate vicinity, such as competition, customers, suppliers, bank, city development and the decisions of the town council are factors on Meso level the meso-level. At the meso-level we look especially at the supply and demand conditions in the local market. 21

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Chapter 1 | The Marketing Concept Schedule 2: the hospitality market Customer groups GuestIntermediariesINKIJKEXEMPLAAR ©SVH Meso-environment Marketing policy: Other participants and vendors distinguishing the business formula from the competition as positively as possible by catering to the wishes of the guest Hospitality Competition business Micro-environment Other providersMacro level National factors that the entrepreneur cannot change take place at the macro-level. These factors can directly affect the entrepreneur’s operating profit. For example, spending in the hospitality industry can decline during times of high unemployment. An increase in taxes by the government can influence the spending of the guest. A lot of technological changes can mean that the entrepreneur must adjust his POS system. The profit of the hospitality establishment is primarily influenced in the long term by developments at the macro-level. 23

Marketing & Sales for the Hospitality Industry Schedule 3: the hospitality market Political, legal, technological and economic developmentsDemographicINKIJKEXEMPLAAR developments©SVHCustomer groupsMeso-environment IntermediariesGuest Socio-cultural trends Hospitality Marketing policy: Competition Other participants and vendors business distinguishing the business formula from the competition Micro-environment as positively as possible by catering to the wishes of the guest Other providers Macro-environment 1.5  |  The business concept An entrepreneur often has a basic idea, around which he starts his business; something that he uses as a starting point. This way of thinking affects the entire business. For example, the purchasing process will be based on the entrepreneur’s idea and so will the staff that he hires. Concept is another word for way of thinking. The entrepreneur’s concept not only affects what products you buy, but also where and how often you buy them. The staff hired also depends on the entrepreneur’s concept. This starting point is reflected in all the business processes. The McDonald brothers started a drive-in restaurant in California. Nothing special. They had really thought the production plan through. In that plan, the kitchen was standardised and everyone had their own task. As a result, they did not need skilled staff and the production could be increased. This meant that the brothers could save on costs. All the work had to be efficient and clean. This was clearly visible to the guests, so that they were convinced that everything was crystal clear and prepared quickly. The business concept is the basic idea of the company.24

Chapter 1 | The Marketing ConceptBusiness concept In theory, there are five different concepts.Production concept 1 Product concept The entrepreneur focuses on creating the best possible product because a good product sells itself.INKIJKEXEMPLAAR ©SVHProduction concept 2 Production concept Everything in the business is aimed at creating as many products as efficiently as possible. In summary: produce as cheaply as possible.Sales concept 3 Sales concept Mass production makes cheap production possible, but how do we make sure that all those products get sold? The objective of this concept is to sell as much as possible.Marketing concept 4 Marketing concept Increased consumer wealth means that they can get what they want from many different sources. The entrepreneur will only make a profit through good market research and by providing products and services that are exactly what consumers want. The wishes of the guests are the focus point of all decisions made within the company. Social 5 Social marketing conceptmarketing concept What does society want? Consumers are more prosperous than ever and are now starting to see the importance of a clean environment, healthy food and a fair distribution of income. In short, well-being for everyone. The entrepreneurs that use this concept think that there is more to it than just making a profit. Businesses must also contribute something positive to society. 25

INKIJKEXEMPLAAR ©SVH Marketing & sales for the hospitality industry C oca-Cola – Responsible Marketing Everyone can enjoy Coca-Cola products. At home or on the road, at school or at work. However, young people and schools receive a special approach. Responsible sales and restrained marketing towards children under the age of 12 spearhead the policy, in order to promote a balanced lifestyle. Children under 12 years Although 7 is the most commonly used age, Coca-Cola has decided to not focus any ad- vertising on children under the age of 12. This is expressed in concrete actions: Complete absence in primary schools. No adverts on television channels whose programmes primarily are aimed at children under 12 years (e.g. Nickelodeon). No adverts or sponsorship with (digital) TV, radio, social media or the web. No ads on other channels before, during or after television programmes for children under the age of 12. Coca-Cola also operates under the guideline of not purchasing any media if more than 35% of the viewers of a TV programme are under the age of 12. No adverts in magazines aimed at children under 12 years (e.g. Donald Duck). No product sampling aimed at children under the age of 12. Not sponsoring school events. Special approach to secondary school students Coca-Cola encourages secondary schools to offer a varied assortment, with the lower- calorie drinks such as light drinks and water getting a prominent place in the vending machines. More than 95% of our vending machines in secondary schools meet these 'Mix-it' guidelines. Coca-Cola took the step towards even more choice and variety with the (co) signing of the ‘Healthier Food Supply at Schools’ charter (‘Gezonder Voedingsaanbod op Scholen’) at the end of 2011. It was agreed in this charter how they cooperate with educational institutions and community organisations to ensure that healthy food and beverages are on the menu at schools between now and 2015. By providing information on vending machines about the calorie count in our drinks, they want to encourage secondary school students to choose a product with fewer calories more often. Coca cola26

Chapter 1 | The Marketing Concept Boost sports They want to use different activities to draw the attention of young people to the importance and fun of sport. Coca-Cola has organised the Olympic Moves sports platform for secondary school students for the past 10 years, together with NOC*NSF and the KVLO. In 2014, Coca-Cola also started a long-term partnership with the Jeugdsportfonds (Youth Sports Fund). The Jeugdsportfonds creates sports opportunities for children up to the age of 18 from low-income families and allows them to participate in sports at a sports association. No promotional activities Coca-Cola does not sponsor school events, and if (sports) activities are supported at school, this takes place without a commercial fee and with little to no brand appearance. We do not sample our products at schools or in the immediate vicinity of a school, and we do not carry out promotional activities that could increase consumption. Clear communication about energy drinks In recent years, Unesda, the European Union for Drinks manufacturers, worked on a Code for Energy Drinks. This was approved in May 2010. This requires the beverage sector to clarify the label of energy drinks by stating that the drink contains caffeine and that it is not suitable for certain target groups. Coca-Cola endorses this code as part of our responsible marketing principles. Source: Coca colaINKIJKEXEMPLAAR ©SVH 1.6  |  Marketing toolsMarketing The entrepreneur must indicate in his business plan what tools he's going to use in order to reach Tools his goals. The hospitality entrepreneur has six marketing tools at his disposal. The entrepreneur can use these tools to align his business with market changes, such as a change in guest behaviourMarketing or a change in what is on offer at the location. Changes to these marketing tools are called Activities marketing activities. 27

INKIJKEXEMPLAAR ©SVHMarkeMtinagrk&etSinagle&s SfoarlethsefoHr othspeitHaolistypiItnadliutystIrnydustry The marketing mix (the six Ps) Place Every hospitality entrepreneur chooses a location for his business concept that aligns with his target audience as much as possible. For example, he takes into account the transport possibilities of his target audience, foot traffic, customer attractors, customer retainers, parking facilities, appearance of the property, purchasing power link, attractiveness of the entertainment/leisure district, etc. Product The needs and wishes of the target group are also key when choosing the quality and composition of the products and services to be offered. Do you opt for a very wide range of drinks in a bar, or is a small but affordable range better? How many dishes need to be on the menu and with how many different preparation methods? What services will be provided in the hotel? Presentation The exterior view, the furnishings, the style and atmosphere of the hospitality establishment determine its image. This image should meet the target group’s expectations and wishes. These expectations and wishes are related to their consumption circumstances: why are they in the restaurant? Personality The involvement of the entrepreneur/manager and staff in the hospitality establishment, how welcoming they are and their social skills determine to a large extent how guests perceive the service level of the hospitality establishment. The guest’s expectations will depend on the reason for visiting the business. The staff should assess this and live up to it. Attitude, body language and motivation are key. Price The price that the entrepreneur asks for his product should align with the guest’s value assessment at the end of the service. In other words, there must be the right value for money. Please note that guests generally find it difficult to give an assessment on the quality of the business. Promotion The hospitality entrepreneur will have to communicate with his target group one way or another. He must make clear what type of business he has and what he has to offer. The hospitality entrepreneur can use advertising, personal selling, direct mail, promotional activities and public relations. Promotion is a proven way to distinguish yourself from the competition.28

Chapter 1 | The Marketing Concept Marketing mix The composition of the marketing tools is called the marketing mix.Business formula When all the marketing tools have been considered and consciously aligned with each other, you have a business formula. And this is the subject of the next section.INKIJKEXEMPLAAR ©SVHCalimeromarketing Karen Romme states in her book Calimeromarketing that a small business owner develops a marketing strategy that closely aligns with himself/herself. The entrepreneur’s personality is the most important tool in this. A calimero business is a company with a few employees, which is built around the entrepreneur and in which he or she plays a defining role. Every business needs to do marketing. Large and small. However, small businesses are not small major companies. In order to be successful, a small business entrepreneur has to deal differently with his business and the resources. Small businesses do not have as many employees, do not have a wide range of products and services, and have a small budget. This means that the rules of the game are different for small business owners, for example: 1 Actively proclaim the message 2 Give priority to existing guests 3 Recruit new customers in a personal way 4 Structurally build a powerful network Source:Every business needs to domarketing. Large and small.However, small businesses arenot small major companies. 29

Marketing & Sales for the Hospitality Industry 1.7  |  Business formula At successful hospitality companies (like McDonald's), the six Ps are clearly recognisable, deliberately chosen and aligned with each other. These businesses first carry out market research, create a marketing plan, and deliberately choose a particular combination of marketing tools. Developing a good business formula takes a lot of time and money. Only by creating good annual plans will a business formula be distinctive enough. Every hospitality entrepreneur must realise that a business formula is never complete. The marketing tools (and thus the business formula) must be adjusted due to the constantly changing market and business developments. A good business formula appeals more to the target group and immediately clarifies what the guests can and should expect. Generally, there are two types of business formulas:INKIJKEXEMPLAAR ©SVHService-oriented A service-oriented business formulabusiness formula This business formula focuses on personal service with an emphasis on service and flexibility. The host must ensure personal attention when dealing with guests. The host should ask about specific wishes and be attentive and helpful. The traditional restaurant is an example of a service- oriented business formula.System-oriented A system-oriented business formulabusiness formula The service is standardised in this business formula. Speed and consistent quality are central. Hospitality gets a very different interpretation and will seem much more impersonal. Counter service and self-service are two examples of business formulas that fall under this system.30

INKIJKEXEMPLAAR ©SVHChapter 1 | The Marketing Concept Burger King American fast food concepts other than McDonald's are also trying to win a spot in the Dutch market. The first branch of Burger King opened in Rotterdam in 1981, ten years after the introduction of McDonald's in the Netherlands (1971 in Zaandam). Burger King opened its fiftieth branch on 30 March 2006, located in Haarlem’s Central Station. Burger King took over the Canadian coffee and doughnut chain Tim Hortons in 2014. With this acquisition, Burger King became the third biggest fast food chain in the world. Product Burger King is based on the good quality of its products. The Whopper has a fanatical fan club, which looks down on the products of their major competitor. Burger King uses this better quality as means of competition. Personality Burger King is a franchise concept. An entrepreneur interested in Burger King must sign a 20- year contract. The franchisee must invest a lot in the branch and in themselves. A franchisee gets a minimum of 900 hours of training. There is also ongoing coaching and personnel training. Burger King also has company restaurants; these are led by a restaurant manager who falls under the management team of the head office. Presentation The latest house style is 1960s retro with a lot of chrome furniture, red leatherette on booths and chairs, and a black and white chequered tile floor. Place Burger King only wants to locate at so-called triple-A locations. A well-known example is the Burger King restaurant at Schiphol, which is the most visited branch in the world. The location determines the success of every fast-food restaurant. Burger King can be found in the centres of large cities, at a dozen train stations and recently once again along the motorway. Promotion In terms of promotion, Burger King stands in the shadow of the major competitor. Given the turnover, it is logical that the budget is smaller than that of McDonald's. To achieve its objectives, Burger King increasingly uses mass communication such as television commercials. Price Quality must be reflected in the price. That's why Burger King is a little bit more expensive than McDonald's. Consumers think it’s normal to pay more for quality. A lower price would give the impression that the product is not that much better. 31

Marketing & Sales for the Hospitality Industry 1.8  |  The marketing policy Management The business concept must be practical. The management of the hospitality establishment must have a deliberately chosen business concept as a starting point. It is wise to work methodically in Business plan order to implement a successful business concept. The entrepreneur first creates a business plan Marketing plan in which he specifies the goals he wants to achieve. For a good overview and clarity, he divides the business plan into the following component plans: financial, staffing and marketing plans. He indicates in this marketing plan how he will supplement or adjust the marketing tools (the 6 Ps) to achieve the set goals. A new marketing plan is usually written every year.INKIJKEXEMPLAAR ©SVH32

Chapter 1 | The Marketing ConceptMarketing objective Marketing policy Marketing policy An example of a marketing goal is: we want to increase the average spend per guest by 5%. Another example: we want to increase the turnover on wine in the restaurant by 10%. In order to achieve such a marketing goal, marketing activities have to be carried out which also incur costs. We speak of a marketing policy when a business writes systematic marketing plans and implements them to achieve set goals.INKIJKEXEMPLAAR ©SVH The marketing policy process Consumer Wishes 1 Adjustment What, how and business formula where 5 will consumers Market research 2 Scheduling of Marketing concept Marketing 3 Activities 4Market research Market research Market Market research is an indispensable part of the marketing policy. Without a market, a hospitality establishment has no outlets. When devising plans, the entrepreneur should be well prepared and research what the possibilities are in the market.External analysis Market research takes place at external and internal levelsInternal research The entrepreneur does external research by looking at the supply and demand for certain products and services. A guest survey is an example of research into the demand for a hospitality product. A competition analysis is an example of research on the supply of a hospitality product. The external analysis must provide the entrepreneur with the opportunities for and threats to his business. The knowledge gained enables the entrepreneur to adjust his policy. Internal research should answer the question of where the business is stronger than the competition and where the business is weaker than the competition. This gives the entrepreneur a better picture of what he does well and what needs improvement. The results of market research and business analyses form the basis of the business plan for the following year. 33

INKIJKEXEMPLAAR ©SVH Marketing & sales for the hospitality industry Explore the area An entrepreneur who wishes to set up a business is faced with a lot of questions. What products and services will he provide? Where will he establish his business? How does he determine the prices of his products? In order to answer these questions, it is important to have an idea of the current market and its possibilities. How does an entrepreneur get an idea of this? A number of practical solutions for the entrepreneur: 1 Regularly go for walks in the area at different times and have a chat with other business owners in the area. Also talk with potential guests and observe their behaviour. 2 Count the number of passers-by within a certain time and try to figure out the peak hours. Check the hours of operation of the competitors. 3 Visit the competition and be really observant. Remember the strengths and weaknesses of their business and use this information. 4 A survey is a suitable tool for specific questions. Make sure that the questions are clear and do not provide ambiguous information. A survey should also be quick to complete. Guidelines for the future The market research gives the entrepreneur guidelines for the future; thanks to the research, he knows what has to be improved in his company to take advantage of certain opportunities. An entrepreneur who is up-to-date with upcoming changes in the market can adjust his company accordingly. He will have to realise that not everything can be changed just like that. The abilities of the entrepreneur and his staff cannot change in the short term. This can be worked on in the longer term with the help of training. The financial state of the company also determines the possibilities of the business. The entrepreneur cannot change everything at once, he must continuously make choices. By creating well-prepared plans, the entrepreneur can properly compare the different possibilities and make the right choices!34

INKIJKEXEMPLAAR ©SVHChapter 1 | The Marketing Concept 1.9  |  Control questions Please answer the questions and find where the answer is located in the chapter: 1 What does the word marketing mean? 2 The hospitality industry consists of three sectors. What do we call these sectors? 3 Each sector consists of five business types. Give at least three examples of these. 4 What is a hospitality entrepreneur? 5 Which three groups of guests (target groups) are generally distinguished in the hospitality industry? 6 List at least three characteristics for each target group. 7 What is a business concept? Give two sample concepts of a hotel, restaurant or café. 35

Marketing & Sales for the Hospitality Industry8 Use this schedule for a business concept and fill it in.Business philosophy Description Central is/are Product concept Production conceptINKIJKEXEMPLAAR ©SVH Sales concept Marketing concept Social marketing concept9 The marketing mix consists of 6 marketing tools. What are they?10 Explain the difference between a service-oriented business formula and a system-oriented business formula. Market research is an indispensable part of the marketing policy. Without a market, a hospitality establishment has no outlets.36

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Chapter 2 | The Hospitality IndustryChapter 2The Hospitality IndustryINKIJKEXEMPLAAR ©SVH The chapter at a glance 402.1 2.2 Introduction  412.3 2.4 The hospitality product 432.5 2.6 Supply chain and industry 442.7 2.8 Manifestations48 2.9 The changing consumer  50 Changes in hospitality establishments 54 Collaboration within the hospitality industry 57 Organisations and institutions in the hospitality industry  62 Questions about the chapter 67For more information, exercises, answers and supportingmaterial: www.masaho.nl 39

Chapter 2 | The Hospitality Industry Marketing and Sales for the Hospitality Industry part 1INKIJKEXEMPLAAR ©SVHHospitality mixCollab- Hospitality Supply chainoration product/ service Sectors Industry www.masaho.nl - Questions: email to [email protected] 4040

Chapter 2 | The Hospitality Industry2.1  | IntroductionPeter has no direct competition in the village where he’s starting up his new bistro. There is noother bar or restaurant located within a four-kilometre radius of the bistro. Each town or city in thearea has a hotel, bar or restaurant. Peter decides to carry out research every third Tuesday of themonth by going out to eat with his wife to hospitality establishments in the region.Their preference is for romantic dining with good food and two glasses of house wine. The first visitto a bistro in a neighbouring village did not meet their preferred dining experience in any way. Ithad ice skates on the wall and the menu was comprised of dishes like pea soup, various stews andschnitzels. Many guests were families with young children. There was a lot of noise and childrenwere running around the place playing, so it was difficult to hear the background music properly.After the main course, Peter and his wife left and looked for a quieter spot.The previous chapter showed that the demand in the market is the basis of every entrepreneurialactivity. The supply in the hospitality industry must align as well as possible with the demand. Tobest meet the demand, the entrepreneur must be up to date on his market environment.The hospitality entrepreneur must have a good idea of the different types of hospitalityestablishments that are around and which of them are successful and which are less so. It isimportant to know what developments in the hospitality market affect the company. It’s alsoimportant to have information about the direct competitors. What do the competitors supply?What are their main target groups and how do they differentiate themselves from his hospitalityestablishment?This chapter examines the whole hospitality industry. The abbreviation of horeca stands for hotel,restaurant and café. The concept of industry will be explained later in this chapter. The differenttypes of hospitality establishments will be covered in a subsequent chapter, as well as generating acompetitive analysis.Before we can examine the industry as a whole, we first have to determine what we mean by ahospitality product and what its characteristics are.INKIJKEXEMPLAAR ©SVHIt is important to know whatdevelopments in the hospitalitymarket affect the company. 41

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Chapter 2 | The Hospitality Industry 2.2  |  The hospitality product What does a hospitality establishment offer? Is it just a cup of coffee or a cheese sandwich or a 5-course dinner? Or does a hospitality product have a broader scope? What does a hospitality establishment have to offer?INKIJKEXEMPLAAR ©SVHHospitality mix Hospitality mix The hospitality product consists of three components. These three components are called the hospitality mix. They are: Product Food, drink and accommodation. Presentation The surroundings, decor and atmosphere of the hospitality establishment. Personality The method of hospitality and the service provided. Using these three Ps, the hospitality entrepreneur can shape his product and align it to the guests that form his target group. He can also distinguish himself from his competitors by using these three Ps. The hospitality product therefore is composed of a tangible product and a service provision process. Characteristics of the hospitality product Consumption and production take place every hour and every day in a hospitality establishment, and often take place at the same time. Therefore, basically any error in the production process and in the provision of services is visible to the guest. This makes doing business in hospitality extra difficult. The main features of the hospitality product are: • The hospitality service process is labour intensive. There is a good reason that the P for Personality is part of the hospitality mix. Service provision is done by the entrepreneur and employees, this makes the provision of hospitality services so costly. That’s why increasingly more hospitality concepts are being developed that keep the personnel costs down. These businesses do have a lower level of service. • The hospitality product can be difficult to keep in stock or to produce in advance. Think of the number of tables or hotel rooms, or the number of staff and the short shelf life of many raw materials/ingredients. • The product must be continuously available. Once the guest is inside, he must be able to use the hospitality product as soon as possible. • The guest can assess the product only after he has made use of the services. This makes the hospitality product particularly sensitive to word-of-mouth advertising and to negative stories about the business. 43

Marketing & Sales for the Hospitality Industry 2.3  |  Supply chain and industry Before a product reaches the consumers, it has already come a long way through various companies. For example, a cup of coffee begins as a bean at a farm in Brazil, is brought by an importer to the Netherlands and then ends up at a coffee roaster. The roaster sells his coffee to wholesalers, who in turn sell the coffee to a hospitality entrepreneur. The coffee finally ends up in the hands of the consumer via the hospitality entrepreneur. CashflowLAAR ©SVH Supply chain The sequence of businesses needed to make a product is called a supply chain. A supply chain is a schematic representation of how a product travels from the (primary) producer to the consumer. Please note that the consumer or guest is outside the supply chain! The supply chain is a total of the companies that are required to bring a product to the consumer. Each link in the supply chain tries to make a profit. Every link will therefore add value to the product so that the product gets its final price. Diagram supply chain Winery (primary products) Wine trade (collective trade) Importer Beverage wholesalers Hospitality businessFlowINKIJKEXEof goodsMP Guest Industry One link in the supply chain represents a large number of businesses. All of these businesses in the Sector link are called an industry or sector. An industry consists of businesses that have a similar function in the supply chain. For example, there is a retail industry, and a hospitality industry. The hospitality industry means all the companies that deliver the hospitality product to consumers and businesses.44

Chapter 2 | The Hospitality Industry Changes in the supply chain A supply chain is a snapshot. There may be all kinds of changes. Go back to the example of the cup of coffee; the roaster could collect the coffee from Brazil themselves and therefore make the importer unnecessary. Or the wholesaler could only sell coffee and pass off the sale of other items. Another possibility would be for the coffee farmer in Brazil to sell all his beans to a purchasing company in Brazil. The purchasing company will then sell the beans on to the Netherlands. As you can see, various kinds of changes are possible.INKIJKEXEMPLAAR ©SVH There are 2 types of changes possible in the supply chain, vertical and horizontal. Diagram: changes in the Integration Forwards supply chain Differentiation Backwards Forwards Vertical Specialisation Backwards Parallelisation Changes in the supply chain Horizontal Vertical changes These changes cause the supply chain to become longer or shorter. Integration is when the supply chain becomes shorter. If the supply chain becomes longer, this is called differentiation.Integration Integration A business takes over a link in the supply chain. This can be a link above it or below it in the supply chain. The supply chain becomes shorter. There is a case of backward integration when a business carries out tasks that had previously taken place before it in the supply chain. An example of backward integration is a hospitality entrepreneur who buys wine himself at a winery in France instead of from a wholesaler that brings in the wine from France. There are already pubs that brew their own beer. With forward integration, a business takes over tasks that would take place after it in the supply chain. A hotel that allows guests to make reservations via the Internet and thereby skips the travel agency. 45

Marketing & sales for the hospitality industry Differentiation Differentiation A business pushes off tasks to another company within the supply chain. This adds a link and the supply chain becomes longer. A hospitality business no longer peels potatoes or fries the chips itself; these tasks are taken over by chip factories. The supply chain becomes longer.INKIJKEXEMPLAAR ©SVH Horizontal changes These changes cause the supply chain to become wider or narrower. Parellelisation is when a supply chain becomes wider, and specialisation is when a supply chain becomes narrower. Horizontal changes have to do with changes of multiple products at the same level in the supply chain. Specialisation Specialisation The entrepreneur is going to focus on a limited part of the production process or product range. A traditional Dutch restaurant is now only going to sell pancakes. Or a restaurant/bar gets rid of the bar section in order to focus solely on the restaurant. With further specialisation, you see that a business is active in increasingly fewer supply chains. The supply chain has become narrower. Parallelisation Parallelisation The opposite of specialisation. An entrepreneur is active in multiple supply chains. An example could be a pub becoming a bistro. It goes from a drinks provision function to also providing meals and becomes active in multiple supply chains. The most well-known types of parallelisation are in the retail sector: the supermarket and the department store. Supermarkets and department stores sell products similar to a bakery, bookstore, lingerie shop, clothing shop, cd store, shoe store, etc. The parallelisation is then implemented to such an extent that we speak of industry blurring. In the 'eating market' we see industry broadening especially in various retail organisations that develop hospitality formulas to focus more on the market for consumption outside the home.46

INKIJKEXEMPLAAR ©SVHChapter 2 | The Hospitality Industry Sales figures hospitality industry CBS and Foodstep The hospitality industry contributes to the economy, is a major employer and provides entertainment. Because of the hospitality industry’s role in the economy, there is a need for good figures on size, growth and developments of the sector. This is important for the sector and for the policy. CBS and Foodstep find it important that users understand the differences in order to find and use the most suitable figures for their practice. • CBS generates revenue statistics for the hospitality industry, i.e. for hotels (including overnight stays), restaurants and bars. • Foodstep reports on the entire food channel, including consumables sold by service stations and in retail, day leisure companies, sports and transport. Main activity hospitality industry (CBS) or also secondary activity in hospitality industry (Foodstep) CBS bases the SBI of a business on that company's registration with the Chamber of Commerce. A centre of gravity approach applies to this. For example, this means that a business that operates 75% restaurant activities and has catering activities or sells souvenirs for the other 25%, shall be classified in the Restaurants SBI. CBS takes into account the complete turnover of the business with restaurants. A company is responsible for registering with the Chamber of Commerce. When the centre of gravity of a company’s activities changes, a hospitality entrepreneur must change the registration at the Chamber of Commerce. Foodstep uses the Data Outlet database as the industry population, which is kept up to date together with Datlinq (and more than 40 suppliers in food service). Hospitality facilities in companies with another main activity (recreation, retail, sports) are also measured as hospitality values. All companies that are operated by food service wholesalers will be designated as food service outlets.  Sources: CBS (Centraal Bureau voor Statistiek) www.cbs.nl/nl-NL/menu/themas/handel-horeca/cijfers/nieuw/default.htm Fsfacts (Foodservice Essentials) http://fsfacts.nl www.foodservicexs.nl/magazines/fsxs-magazine 47

Marketing & Sales for the Hospitality Industry 2.4  | Manifestations The 'hospitality establishments' link in the supply chain represents a large number of different business types. Examples could include a four-star hotel, a pub and a cafeteria. We come across various hospitality establishments in every town or village. This variation is characteristic of the hospitality industry. This variation occurs because entrepreneurs deliberately want to distinguish themselves from each other. This is what we mean by differentiation. The need for differentiation in business types and manifestations is mainly a result of the strongly changing consumer. These changes will be discussed in the next section. The increased competition in the hospitality industry is also a reason for the wide variation. The entrepreneur should stand out compared to his competitors and focus on groups of guests with sufficient revenue opportunities. The companies file in the hospitality industry is subdivided into the four distinctive forms in which hospitality is usually offered: a. the beverage supply sector; b. the meals supply sector; c. the food supply sector; d. the hotel sector.INKIJKEXEMPLAAR ©SVH Differentiation in the hospitality industry Industry Hospitality Sector Beverage Meal supply Food supply Guest accom- supply Companies Companies modation Business Companies Provision type Restaurant Cafeteria Companies Bar Bistro Fast-food Pub restaurant Hotel There is a classification by the professional sector (formerly the Hospitality and Catering trade organisation) created for hospitality and catering companies. This classification is based on the product supplied (beverages, ice cream, pancakes), on the specific location of the business (at a campsite, on the beach) and a number of other distinguishing features. The following business types are distinguished:48

INKIJKEXEMPLAAR ©SVHChapter 2 | The Hospitality Industry Hospitality industry Revenue 2011 12.916 Revenue 2012 12.825 Revenue 2013 12.553 Guest accommodation sector Revenue 2011 1.633 Revenue 2012 1.648 Revenue 2013 1.626 Restaurant sector Revenue 2011 4.252 Revenue 2012 4.242 Revenue 2013 4.137 Beverage sector Revenue 2011 2.753 Revenue 2012 2.692 Revenue 2013 2.623 Fast service sector Revenue 2011 2.558 Revenue 2012 2.489 Revenue 2013 2.447 Source: Foodstep, September 2013 / traditional hospitality / revenue * (€ million) 49

INKIJKEXEMPLAAR ©SVHMarketing & Sales for the Hospitality Industry 2.5  |  The changing consumer In the previous section, we noted that there is a large variation in the business types within the hospitality industry. The changing consumer is stated as the main cause of this. This is not surprising because a change in consumer spending has a significant impact on the earnings of a hospitality business. As much as 70% of the demand for hospitality products comes from private individuals. Business spending accounts for 30% of the demand. So what’s changed so much with the consumer and his surroundings? The prosperity development The Netherlands has become increasingly prosperous and every Dutch citizen benefits from this. Almost anyone can afford to visit a hospitality establishment. This development has given rise to a greater demand for mid-level hospitality establishments. The increased prosperity means that certain luxury items have become quite common for consumers and, as a result, the consumer has become more demanding regarding the decor and amenities of hospitality establishments. Labour costs for hospitality businesses have increased sharply due to this increase in prosperity. The hospitality product is labour-intensive and therefore sensitive to the rise in wages. The increase in leisure time Our work week has steadily decreased over the last 100 years, from 60 hours to the current 38 hours, and we have more vacation days. This gives the consumer increasingly more free time for things like shopping and the demand for cafes, fast-food companies and lunchrooms in shopping centres has risen sharply. A visit to a hospitality establishment is often part of the plan for spending free time. The increase in the number of married working women More and more women participate in the labour process and continue to work after having children. It is expected that the percentage of working mothers will continue to rise. This also increases the demand for ready-made products, takeaways and food deliveries and restaurant visits. The increased demand for convenience foods is enhanced by the increase in the number of one- person households. Travel is increasing along with more frequent (short) trips, also for business. The traveller’s requirements are increasing, both on the travel itself and on the quality of the accommodation and recreational facilities. In order for these facilities to remain profitable, you'll see increasingly larger companies in this sector.50