Market and Competitor Analysis of Hotel Industry
Market Analysis: Industry and Competition
EXECUTIVE SUMMARY
Businesses fail to define satisfaction in the same way that customers do. Customer relationship satisfaction is measured by repeat business and recommendation of the store to others (Thompson 2004, p. 104). While customers can agree to these behaviours only “60% of customers who named a business they were loyal to, said they would also shop at the competition” (Donogh 2000, p. 1). How consumers perceive a company or product depends upon varying factors different for each individual (Whelan 2004). It is part of the job of the e-marketing analyst to disseminate how their client will gain market share and competitive advantage through marketing schemes. With regard to the tourism industry and creating customer relations, it is important to remain unique and as individual as every customer. How does one do this with limited time and funding? Customization of a web site is key to advantage but also creating a unique experience on the web site and at the destination is part of niche marketing and a main cornerstone to any tactic.
GENERAL OVERVIEW
It is of utmost importance to carry out an analysis of the industry per business operations and define the competition. As part of this presentation, a market analyst should keep in mind different models in which to decipher the current state of the market and where to gauge an organisation’s advantage. For the purpose of this presentation and understanding the tourism industry, four models chosen for this analysis are: (1) SWOT analysis, (2) PESTEL analysis, (3) Michael Porter’s Five Forces and (4) Boston Matrix. By comparing and contrasting the Althorn web site with the competition of other stately English homes, one can better assess the marketing plan and continue to make appropriate changes. The web sites chosen for review with Althopr.com are as follows: (1) Balmoralcastle.com and (2) Muscottmillfarm.co.uk.
MARKET INDUSTRY ANALYSIS: SWOT Analysis
The Historic Monument Travel Industry
Strengths and Weaknesses are considered internal factors while Opportunities and Threats are external to company (‘SWOT Analysis’ 2005). It is important to note the analysis using this tool is very subjective in nature. When it comes to niche travel, England’s stately homes, castles and historic monuments fall into a very distinctive category that surprisingly appeals to many travellers’ sense of history. What makes the online presence special is being about to capture history while maintaining a certain level of current events, even celebrity about staying somewhere unique.
(S)trengths: Places like Althorp and Balmoral have the essence of royalty engrained into the image and experience. These places have been witness to infamous times in history and famous people as well.
(W)eaknesses: Historical travel destinations may also have an air of affluence about them, which could limit their target audience potential. This feeling of being beyond reproach may send mixed signals to the common man.
(O)pportunities: Because places like Althorp and Balmoral are well known to the public because of their relationships to royalty, this propels them into the spotlight more than other less known sites like Muscott Mill. These places like Balmoral have history but also many opportunities that a smaller place cannot take advantage of. Places like Balmoral and Althorp also have a following where product sales with branding becomes key to continued image and public awareness. This allows them more interaction and further investment into different ways to capture the audience such as private rentals and entertainment events like golf and concerts.
(T)hreats: Consumers may be afraid to travel because of the war in Iraq and threats of terrorism, increased security being time consuming. Also times are tight for a lot of people due to increasing energy costs and lack increased spending power. Many people have chosen to stay home or vacation close to home. Places like Althorp need focus on local tourism.
ALTHORP.COM: CURRENT AND POTENTIAL MARKETS
PESTEL Analysis
This strategy analysis takes into account external forces, which may have influence on the organisation’s success (‘PESTEL Analysis’ 2005).
(P)olitical: The political force that may influence Althorp is its relationships with the surrounding local community. Many do not want to see their ‘neighbourhood’ tarnished or changed by the tourist traffic or see Althorp take advantage of their royal status. Environmental: This is a very trendy topic, the notion of ‘going green’ but needless to say something to consider adopting as part of the new image tactic. Also Althorp should consider the fuel demands of travellers and maybe run a promotion with a local hotel or petrol station.
(S)ocial: Social forces at work externally could be a fear of flying or travel. Also in times of trouble, people band together, become closer within their communities. Althorp should consider looking closer to home and cultivating a relationship with locals. They should use the Internet as a tool to focus globally.
(T)echnological: Obviously the web site is classy and reflects the overall image of Althorp as a stately home with beautiful grounds. The web site should using appropriate e-tools to continue consumer interaction. These e-tools vary from pod casting to blogging but also create a more intimate interaction with the public, which also reflects another image of Althorp being a special place for Princess Dianna. Continued evolution of the web site can bring a feeling of closeness to the site it lacks currently. This may involve further investment to update software and hire a Web master or graphic designer.
(E)cological forces at work for Althorp include once again the price of fuel or energy source and its prolonged use at the site, the affect it has on the environment. Has Althorp considered what affect it may have on the global warming? It would environmentally sound for the company to research ways to conserve and protect the environment maybe through a conservation project in conjunction with another site.
(L)egal forces or changes in the laws that govern travel are constantly in issue. Also Althorp must keep in mind a lot of times people are not culturally aware of differing laws that apply when travelling. It is important that not only the house watch for the risk legal issues cause but also look out for its employees giving the correct information to customers.
THE COMPETITION: BALMORAL AND MUSCOTT MILL FARM
BALMORALCASTLE.COM
PORTER’S FIVE FORCES
Customer Bargaining Power – High
Today’s Internet savvy consumer is educated when it comes to their travel plans. This gives the consumer power over places like Balmoral to match their need for a web site that will understand their intelligence. They know what they want and at what price they want it. They may chose a different destination if they don’t like the web site.
Threat of Substitute Products and Services – Emerging
This is where diversification of services at Balmoral becomes important and an asset. The future of these places depends on presentation of different formats and product specialty to keep the customer’s attention. These niche locations like Balmorals will meet consumer demand of specific needs.
Supplier Bargaining Power–Medium
The bargaining power of Balmoral is relatively medium because of the nature of the product. Balmoral must remain at above industry standard while maintaining the sense of class found and that level of services.
Threat of New Entrants – Emerging
New entries into the market, one would think should be low because of the designation of this being a niche destination as historical but the truth is places like Balmoral must compete outside their niche for capture of customers. They compete with theme parks and adventure vacations of the like. Many tourists because the information from the Internet is so vast are looking for something beyond the regular vacation.
The Overall Level of Rivalry – Moderate
There is a perception that the more densely populated the area becomes the higher the competition with the company struggling for market participation. This is an incorrect assumption because most of niche travel locations are operating online mainly suppliers to manufacturers or to the public. This results in less advertising and an environment where the competitive spirit is unvoiced.
MUSCOTTMILLFARM.CO.UK
Boston Matrix Analysis
There are four areas that divide the matrix so that a place like Muscott Mill Farm can be differentiated from other stately English homes or working historic monuments. The place falls into one of these areas. The four areas are as follows: (1) Stars, (2) Cash Cows, (3) Question Marks and (4) Dogs (‘Boston Matrix’ 2005).
Stars are tourist sites like Balmoral or Althorp that have a strong presence in the market and they are able to keep up, even be ahead of the competition. Balmoral, while stoically regal also maintains a global image because of it being the Queen’s summer residence. Cash Cows are smaller places of interest like Muscott Mill that are not in the spotlight and may be hidden from the average tourist’s mind (‘Boston Matrix’ 2005). Many smaller historical sites are becoming cash cows because of operating cost increases but also the aftermath of 9/11 remains. People are not as eager to travel and the price of airfare keeps people closer to home. Muscott Mill would be better off focusing on local markets for shorter weekend holidays. Question Marks are companies that have potential to make money if they are run properly (‘Boston Matrix’ 2005). A good example of a Question Mark in the industry would be smaller B&B type places but not at the level of Muscott Mill. They are constantly facing challenges with their operations management and particularly labour disputes. Dogs are companies that are just terrible, have no potential and should be out of business but continue to struggle (‘Boston Matrix’ 2005). Euro Disney is the prominent example. It has never lived up to the hype. Muscott Mill Farm remains at the bottom of the chain of advantage because it is not well known by the public as a destination. Its web site is quaint at best and not at all interactive but yet one can see the purpose it serves to at least introduction someone to its existence.
EVALUATION OF MARKETING COMMUNICATION AND CRM
A company’s marketing and recognition begins with its name. Because the business of tourism is greatly service oriented, it is of utmost importance that the company’s name has integrity. With time, as the organisation further establishes itself, the two will become interchangeable. The organisation has a reputation to uphold where market share remains wide-open and competitive advantage strong. Recently the house’s name and intellectual property in the forms of trademarks and brand has been at the forefront, in constant view thanks to e-business.
John M.T. Balmer surmises that much of the problem with establishing a marketing framework for organisations is built on the concept that the notion of identity is vague to the corporation and therefore the consumer. Defining identity and therefore CRM becomes a challenge now especially as business practices change and shift to encompass all areas of focus and strategy. Balmer’s (2001) research writes of, “identity was a pressing issue for many institutions and that the question of identity, or of what the organisation is or stands for, cuts across and unifies many different organisational goals and concerns” (p. 250). Hence the confusion and challenge of figuring out exactly what identity is for a particular organisation because it is different for each.
CONCLUSION
The purpose of this presentation was to demonstrate different market strategy models that allow one to analyse not only the particular industry but also the competition. The niche travel destination market has its strengths and weaknesses but also these are areas that Althorp can use to make its marketing scheme better. The competition for the United Kingdom is vast but Althorp has many elements on its side as a special location for travellers. The main focus of any marketing scheme should be to know how to capture the mindset of the individual to reach a higher state of competitive advantage and this begins and ends with conveying the correct brand image.
REFERENCES
Allen, G 1999, Introduction to Marketing, Mountain View College, Mountain View, California.
‘Althorp’, Althorp.com, viewed 5 Aug. 2008,
Balmer, J M T, Fukukawa, K & Gray E R 2001, The Nature and Management of Ethical Corporate Identity: Discussion Paper on Corporate Identity, Corporate Social Responsibility and Ethics, Bradford School of Management, England.
Balmer, J M T 2001, ‘Corporate identity, corporate branding and corporate marketing seeing through the fog’, European Journal of Marketing vol. 35, 3/4, p. 248-291.
‘Balmoral Castle’, Balmoralcastle.com, viewed 7 Aug. 2008,
‘Boston Matrix or Boston Consulting Group Box “BCG” Box’, viewed 5 Aug. 2008,
Donogh, J 2008, ‘Customer Loyalty—From the Customer’s Perspective’, viewed 3 Aug. 2008 http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemid=1074451452>
Peters, T 2003, ‘Helping Small Firms Put the ‘e’ in Trade’, International Trade Forum, 1 July.
Pitturo, M 1999, ‘Get into the e-Commerce Without Betting the Store’, Journal of Accountancy, 1 May.
Porter, M E 1999, Strategy and the Internet, Harvard University Press, Cambridge.
Porter, M E 1985, Competitive Advantage: Creating and Sustaining Superior Performance. The Free Press, New York.
‘SWOT Analysis’, viewed 5 Aug 2008,
Thompson, H 2004, What They Want: Ten Myths About Your Customers, Prentice-Hall, Clifford Falls, New Jersey, p. 103-112.
Whelan, D 2004, ‘Build It and They Will Come’, Forbes, 27 Dec 2004.
APPENDICES
APPENDIX A
SAMPLE POSSIBLE QUESTIONNAIRE
1. How do you rate Althorp’s web site overall ease of use? (1=very easy; 5=very difficult)
2. Having Althorp’s picture of the web sites you visited (1: strongly agree; 5=strongly disagree; 6=no opinion)
a. Reflects how you think about the web.
b. Gives you more confidence in exploring the web.
c. Slows down the computer too much.
d. Helps you feel more adventurous.
e. Lets you know where you are in the web.
f. Takes too much time to use.
g. Helps you move around in the web.
h. Makes me feel like I’m travelling throughout the web.
i. Takes up too much space on the screen.
j. Makes web organisation clearer.
3. Please rate how you think Althorp would be for the following functions (very useful, useful, not useful, don’t know):
a. Pure Entertainment (games, chat, humor)
b. Personal uses (hobbies, health, recipes, travel)
c. Business (buy and sell, product info, banking)
d. Academic (exchange data and results, communicate with colleagues, grad info).
4. I feel that looking for information on the World Wide Web using Althorp.com is: (Strongly Agree, Agree, Neutral,
Disagree, Strongly disagree, Don’t Know):
Easy; entertaining; confusing; complicated; intimidating; hard; boring; straightforward; simple; frustrating.
