5BUS1032 Marketing Planning

Hotel industry is a sub industry of travel and tourism industry and China has become the most emerging economy which has opened a lot of market opportunities for travel and tourism industry. Factors affecting the growth of hotel industry in China include market size which increases daily as the demand. However for Red carnation hotel to enter into market and improve its growth rate, it has to offer unique services which are not offered by other hotels.

Another factor that affects the industry is the growth rate, the degree at which the industry grows is largely dependent on many factors which include changes in demographics, changes in preferences for hotels by customers, change in affluence and freedom of travelling within the markets.

Technology also is another factor; the industry should have advanced technology as customers nowadays have embraced use of technology in seeking services like, booking of accommodation rooms and ordering for meals.

High quality and constant suppliers help in meeting the hotels requirements and these helps in increasing the services and products offered. This has a great impact in the growth of the hotel industry in the emerging market.

It is therefore very important to look into consideration all the above factors before venturing into an emerging market as it helps in making the correct decision which has a great impact to the hotel industry.

Value chain represents internal activities engaged by an industry to transform their inputs to outputs, while value chain analysis is a strategy where an industry identifies its activities that add value to its final product and looking at these activities to help in cost reduction or increase differentiation.

Value chain model was introduced by Porter in 1985(Kramer & Porter 2011) and it helps in identifying and analyzing opportunities and risks the company can meet in the industry. There are forces depicted in the model which affects the hotel industry and it includes other existing hotels. There is high rivalry between existing companies if their number is high and fixed costs are high.  

Another force is the risk of entry by competitors, the higher the threat for the market share of existing competitors, the higher the barrier to entry to the industry hence low risk of entry of potential competitors. These barriers can include Government policies, economies of scale, cost of moving, high capital, and access to distribution channels.

Threat of substitutes can also affect the opportunity analysis, this happens when a competitor opts for an alternative which is most preferred and easily accessed by customers than hotels, this affects the hotel. These substitutes include camping and caravan parks, seeking accommodation from relatives/friends, these can lead to low turnout of customers in the hotel.

According to Porter(2011),  bargaining power of the industry is a force to look into, this happens   where buyers bargain for the prices to be reduced, high quality; this hence affects the profits of the company.

Competitive strategy is a very important strategy in that the market has to attract customers by creating a unique product/service as compared to their competitors, so that customers get interested in the products/services offered.

SWOT analysis involves collection and presentation of factors which influences a business. SWOT stands for Strengths, Weaknesses, Opportunities and Threats (Sarsby 2016). Strengths and weaknesses are internal and are managed directly in the company, while opportunities and threats are external and the company looks at them and find ways of handling them. For a company to do well in the hotel industry, it has to do good analysis by identifying its strengths and weaknesses and looking into what they can do better and of value which is not done by competitors and if there is a weakness, they have to find a way of improving it, hence doing well than the competitors.

For the company to make good analysis, they should be well conversant with the actual happenings in the industry so that they can achieve greatly and be able to venture well in the market.

Many companies have decided to invest overseas due to many reasons like global diversification, high competition locally, following up customers who change residence. Important things to consider in global marketing include, but not limited to product design, market research, advertising agency, pricing and distribution channels.

These four potential markets have been competing with European market which has 33 countries, France included. An analysis was done by finding out the key markets for Europe and the destinations of its competitors, then assessing strengths and weaknesses of those destinations and finally finding out those with strong competition for Europe in each market. These destinations with strong competitions are those which have high tourism levels and are receiving high number of tourists.

Among the four potential markets, China and Thailand has been ranked in mid level than the other two countries although these markets have weakness in the countries regulations, business environment and infrastructure, but because China and Thailand have strong tourism attraction and this helps improve their entry in market (Ozturk et.al 2015).

When a company expands its businesses, it must consider many things like what product to offer, the country to offer the product, time and mode of entry. Here we are going to look into China’s market using the 12Cs framework (Lee & Carter 2012) to determine the entry for Red carnation hotel in this market.

Country – China is an emerging country in economy with lots of market opportunities, the Red carnation hotel can do well if it ventures in China market because with increased level of tourism in the country it will favor its growth.

Choices – China’s market has stiff competition because of its growing market and every investor wants to venture into the market, so the company should strategize on how to counter competition.

Concentration – red carnation hotel should find out the spread of hotel industry in China and try offering services which are unique to help the increase their sale and growth.

Culture- the Company should consider the behaviors and characteristics of consumers in China as this will determine the kind of products and services to offer.

Consumption – with the increased opportunities in China, demand for hotel services is high thus this will favor Red Carnation hotel growth in China.

Currency – this is the exchange controls, with the increased growth of investors in China, exchange rates have been regulated to favor investors and increasing their growth in the market.

Capacity to pay- regulated taxation in China has led to increased number of investors and by so doing Red carnation will venture well into the hotel industry market.

Channels – this involves the way products are distributed. Hotel industry distributes itself because tourism growth rate.

Commitment – china acceptance to investors has removed barriers which were causing blockages to investors; therefore Red carnation can do well in China.

Communication- It has always been a barrier because of language difference, but the company should consider employing even the locals to help in communication when language becomes a problem.

Contractual obligations- legal obligations in China has been loosened to enable investors get legal necessities easily.

Caveats- China has opened room for business explorations ad therefore there is little or caveats placed to block investors.

China being the most emerging market for investors, it has been easy for many companies to venture into market in that country. The increase in travel and tourism industry has led to an increase in hotel industry and therefore a great recommendation can be given to the Red carnation hotel to venture into China market.

For an investor to venture into certain market it has to consider the mode of entry to the country/market and there are various options(Morschett & Swoboda 2011) which include contract manufacturing whereby a local partner can be given a job to produce some products and then the company gives the job to an investor to do the manufacturing. In such cases there should be agreements so that the production can meet the demand required.

Licensing is another option to consider, it gives a local partner an opportunity to utilize assets like patent, trademarks, over a specified time. Licensing favors companies that lack facilities and expertise to invest in foreign facilities. It helps a company do away with import barriers and lower exposure to political and economic stability.

Joint ventures whereby a company shares resources with another to establish a new entity in the market being ventured, this helps in improving the revenue as risks are spread reduced capital requirements, and quick access to expertise in the market. However, differences can arise in areas like pricing, resource allocation and control of key assets.

Wholly owned subsidiaries are other options whereby the global company takes full control of operations and they are planned and executed as it should be. The risks of this option are high and the company will have to bear full burden of losses.

Alliances is also an option to consider in that companies come together in an informal arrangement to carry out important issues that benefit both parties. This can be an important tool to defend existing market position and catch up with competitors.

The appropriate mode of entering the market which should be used by the Red carnation hotel in venturing into China market should be determined by these two options either contract manufacturing or wholly owned subsidiaries.

Socio-cultural factors of a business are basically the effect from the societies believes practices and the way it behaves. They include religion and beliefs, lifestyles, social classes, saving and investing attitude, education level, income level, family size and structure. (Doole & Lowe 2005)

Marketing mix is about putting the right product in the right place, at the right time and at right price (Goi 2009). For the Red carnation hotels, a good marketing should be considered depending on the SWOT analysis and the cultural factors. When choosing the right product and service to offer, it should consider its strengths and weaknesses and also the culture of the people of China, this will help in going for that opportunity and hence use right place, right time and this will help come up with right price for the products.

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