M&S2, Answers Chapter 6

MARKETING& SALESHOSPITALIT Y MARKETING & SALES FOR THE HOSPITALITY INDUSTRY ELLEN VAN KOOTEN Chapter 6 | Answers | Questions about the chapter 2

Marketing & Sales for the Hospitality Industry | Part 2Chapter 6 | Answers | Questions about the chapter 1. Answer the question and then find the answer in the chapter. a. In your own words, explain what the owner of a restaurant must focus on in the marketing tool of price. Multiple answers possible, at the discretion of the teacher. For example: The hospitality entrepreneur will want the best possible return and will thus be inclined to keep his prices high. However, he will also be aware that guests must be willing to pay his price and that they will turn to the competition if his prices are too high. He must therefore consider which price he can ask for his products. b. List six important points. i. the business formula; ii. the quality and level of service; iii. the costs; iv. his marketing objectives; v. the competition; vi. the target group; vii. his gross profit. 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 good sold? a. The sum of all the costs that can be attributed to a product. b. The sum of all costs of the company. c. The sum of the income from all guests. 5. Give examples of the terms price range, full-line pricing, price lining, product bundling and psychological pricing. Multiple answers possible, at the discretion of the teacher. For example: i. Price range: The price range is the difference between the most expensive and cheapest product in a product group. ii. 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. iii. Price 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. iv. Product 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. i. Psychological pricing: 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.Version 1 | 22-10-2018 | [email protected]

Marketing & Sales for the Hospitality Industry | Part 2 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 persons, for instance people of different nationalities. 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. Multiple answers possible, at the discretion of the teacher. For example: 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. 9. Give an example of when a hotel would apply price discrimination based on 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. 10. Provide examples of the following trade discounts: non-cumulative volume discount, cumulative volume discount, early payment discount, credit surcharge. i. Non-cumulative discount (group discount): If someone purchases large quantities at a time or uses hospitality facilities with a whole group, they are often given a discount. ii. Cumulative volume discount: A cumulative volume discount is given if the customer buys a lot throughout the year. This discount often increases as the volume does. iii. 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. iv. 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.Version 1 | 22-10-2018 | [email protected]