Adoption And Diffusion Strategies For Hotel Pearl

MAN310 New Venture Planning and Development

Marketing Mix Components for Hotel Pearl

Before developing strategies for adoption and diffusion of new hospitality service of Hotel Pearl it is essential to understand the concept of Adoption and Diffusion. Adoption is procedure where user starts and continues with using the product. While diffusion is the procedure which defines the rate of adoption of a new product/service within the market and includes five stages (Zolait 2014).  At Knowledge stage of diffusion procedure which is the first step the potential adopters are revealed to the new product/ service itself. At this stage adopters do not have much input to initiate buying decision and are not fully impressed to find more information. Hence at this stage the marketer of Hotel Pearl needs to seek for ways to enhance their hotel product awareness and offer more information so that adopters can move to next stage. The first stage is crucial because if right end user can’t find right product then it does not survive (Makkonen and Johnston 2014).  At Persuasion stage which is next step of diffusion procedure the potential adopter is open to the thought of buying and actively looks for information that will support their prospective decisions. Hence at this stage the marketers of Hotel Pearl needs to look at conveying features and USP of their service in detail with conscious intentions to sell offerings to potential adopter at this stage (Adarsh, Richie, Ompal and Deepti, 2016). The next is Decision Stage where the potential adopter makes a buying decision and examines the pros and cons of adoption so they either try or reject the service. This stage is very difficult because adopters do not make logical decisions in many cases and most of these decisions rely on intrinsic assumptions and emotions and after making decisions adopters attempt to reason out (Sang-Gun, Trimi and Kim 2013). Hence marketers of Hotel Pearl need to collect interpretations of their prospective customers who could be likely adopters to understand their decisions making process in advance so that proper strategies are set out to change their perceptions and initiate likely decision. According to (Mehmood, Barbieri and Bonchi (2016) next is Implementation stage where after a decision for purchase is made by adopter the services or products are mostly used. At this stage adopter decides whether or not the product is actually beneficial to meet their needs and may look for additional information to support the usage of product or to better interpret the context of product.  At this stage marketers of Hotel Pearl develop strategies so that end users can get more information specifically for post sales conditions as these decides the quality of implementation involvement which influences users final decision, so higher the convenience to access information and better the quality more is interest of user to browse information of service. As opined by Askarany and Yazdifar (2015) the last is Confirmation stage where the adopter examines their decision and finally reviews either to select or reject the product. This stage can be discontinued if product is rejected else it continues. At this stage product are either individually examined or reviews are checked on social page, from peers etc. So at this stage marketers of Hotel Pearl should ensure that their social pages give more positive reviews on services.  

Adoption Stages of New Products and Services

The most suitable strategies for adoption and diffusion of services for Hotel Pearl are digital and social media marketing because both have various options for placement of advertisements. Like for example, Facebook ads are more effective than just putting together posts and periodical amplification. As stated by Bashir, Yousaf and Wani (2016) there are various marketing and advertising strategies to put ads through Facebook and placing them effectively to target audiences. Telling the story of customer experience or unique benefits of services of Hotel Pearl like facilities of arrangement for banquets for casual occasion and business seminars for commercial events, offering guest safety, arrangement of pick and drop etc will narrate the features of services.  Also benefits of location, sea view, facilities of recreation etc will attract customer interest so these stories can be shared through Facebook. Pearl hotel can use carousal ads to show multiple videos or still images that will popularly catch attention of customers and will initiate desired action. These ads on Facebook platform will allow more images in single ad which also will enclose website link. Users attention rate is higher towards these type of ads as they are interactive and allows users to swipe or click through ad to provide more flexibility and ability to recreate stories effectively (Molinillo and Japutra 2017).  Alternatively Pearl hotel can use dynamic product ads by establishing their website pixel and product catalogues through these digital media ads where through digital platform products can be promoted to appropriate customer based on their browsing history. This strategy can be very useful as it has higher shopper reach and can be re-targeted across all consumer touch point devices.  

According to Leung and Baloglu (2015) the first marketing P of Hotel Pearl comprises of Product/Services, which includes components like brand name, functionality, quality and safety. The hotel being a five-star will have colourful style and pattern for the logo of its brand name representing its accommodation and Australian culture while its functionality will revolve around arranging events or occasions like banquets for casual and business parties or any other social, educational or political event. Fully equipped meeting spaces and guests accommodation will be available for delivering customer satisfaction. Focusing on quality and guest safety, the hotel will arrange pool cars for picking and dropping their guest from airport to the hotel and vice versa to build customer relations besides generating revenues. In case of any loss or damaged caused to guests during their stay, the hotel will prepare a mutual safety agreement with customers where quick checks will be executed to identify who is accountable for the damage to bear the responsibility as per the agreement.

Strategies for Digital and Social Media Marketing

The second marketing P of Hotel Pearl according to Mukherjee and Shivani (2016) comprises of Price including components like price strategies, payment, seasonal pricing, flexibility and price discrimination. Different price rates will be provided by reservations, sales and marketing ensuring that pricing is specifically clear for accommodation and events. However, accuracy in prices for meals will not be provided in advance and negotiated on the budget of events and/or occasions. E-payment method and cash transfers will be accepted depending on the customers. Market skimming price will be considered as price strategy during peak seasons for increasing prices to reap more profits. While in off seasons marketing penetration price will be considered for reducing prices of event or accommodation bookings. The hotel will accept payment in every form, including credit and debit cards besides for events and accommodation bookings arranging for master account folio for corporate clients and individual account folio for regular customers. Seasonal prices will be arranged twice a year like in upcoming Arafura Games in April 2019 and Australian Football League in September for reducing the prices while the prices will be increased in January during the Australian Open to be held in Melbourne and the hotel is closer to the stadium. Depending upon the corporate clients or customers profile, flexibility in prices will be provided besides providing different price for a tourist for gaining more profits.

According to Genoveva and Siam (2017) the third marketing P of Hotel Pearl comprises of Place, which is located in the capital of Victoria and most populated city Melbourne, dynamic, stylish, arty and cosmopolitan city known as sporting and cultural capital of Australia. The hotel will design user friendly website to make online reservations besides phone and email bookings. It includes components like marketing coverage, processing, and transportation. As a part of marketing coverage, the hotel will send its sales and marketing executives to selected companies for marketing communication, informing them about the services. The bookings will be processed by the Reservation Manager for determining the requests made and event or accommodation to be booked besides sending reminders to the customers about the payment method and booking date. By arranging pool cars for pick and drop the guests from airport to hotel will be provided to create a new transportation system.

The fourth marketing P of Hotel Pearl according to Jackson and Ahuja (2016) comprises of Promotion and its components include promotion strategies, advertising, personal selling & sales force, sales promotion and public relation. Push promotion strategy will be practiced by the hotel to welcome guests from the main entrance, collecting their luggage, checking bookings and directing towards their rooms for giving an impression of its offerings. As a means of media, print advertising will be used for giving more information to customer about the hotel services and view into how events like parties, corporate meetings etc. are arranged besides detailing about the type of rooms, patterns and style. To sell their accommodations and event rooms, the hotel will use sales calling besides sending their sales executives in the form of personal selling and sales force to potential customers. Membership cards will be provided to potential customers as a sales promotion technique enabling them to avail discounts besides offering weekend rates, seasonal prices and incentive trips plans. Public Relation will help the hotel to gain edge over competitors.

According to Mihailovic (2017) the fifth marketing P of Hotel Pearl comprises of Physical evidence that will be provided in the form of additional offerings like procures, business cards, gifts and accessories besides offering the guests with a homely atmosphere and astounding ambience, building, exterior design, landscape, parking and surrounding environment for strongly influencing on customers decision and final satisfaction.

According to Navarro, Casillas and Barringer (2012) venturing new into the hotel industry Hotel Pearl will have to grow through external sources with a mandate of accumulation and hence, the management will have to focus on growing income by using internal methods. Opportunities of enhancement will be assessed by developing and encouraging sustainable income improvement solutions from real estate’s affiliated with the hotel. Value Creation and Preservation Strategy (VCPS) tool will used to maximize its overall value by identifying the repositioning strategies, non-traditional revenue origins, commercial and/or retail leasing options, surfeit land use options, prospective benefits of capital renovation and brand repositioning, highest-and-best-use evaluation and enhancements in property tax burden with the overall objective to maximize the property’s income outcome. According to Yazici,  Köseoglu and Okumus (2016) another growth strategy that the hotel will use revolves around reviewing branding and management, which would contribute in identifying the substitute sources branding and/or management and expected benefits. Application of the suggestions will further help the hotel in improving the income of the asset by generating capability from hotel operations and eventually its value. The management should comprehend that few contracts might be an impediment, adversely affecting the hotel’s income and value hence, completing a thorough due diligence on all scenarios will be feasible further benefitting the owner. Besides, physical evaluation will be another productive growth strategy for the hotel further playing an important role in its long-term value prospects. Buying a damaged property would result into losing market share and revenues as guests will prefer other hotels further causing a loss of brand affiliation, a likely negative impact of a damaged asset. Benefits of a reinvesting continuously into property in terms of renovation will be outlined by the VCPS tool forcing the management in gauging the competitions physical condition besides completely approving suggestions for capital improvements. VCPS utility element will determine the prospective benefit of a capital renovation in order to provide rationale to finance a project. For minimizing disruption in the business, lessen the probability for lost income during renovation period and deliver on time and budget, it is important to plan for effective managing a capital renovation. Areas that will require planning such as architecture, engineering, legal, and construction and project management is identified by the VCPS tool followed by again rationalizing the expenditure by outlining the positive impact on earnings. Another growth strategy that the hotel can utilize is anticipating the impact of new supply, which may adversely affect its economic life. Many cases are evident where new hotels failed in supporting development based on target markets operational statistics as they believed that a new hotel will automatically would pilfer the existing hotels market share and become successful on its own leaving behind the substandard performers to suffer. However, Hotel Pearl by developing the VCPS tool can predict how a new supply will affect on its asset’s value and design a proactive strategy for either minimizing the impact or lessening the probability of new supply. Risk sharing- leasing out the operations components is another growth strategy the hotel will use. Income can be improved by leasing out certain operating components of the hotel such as food and beverage operations, spas, golf courses and parking facilities to specialized third party operators. This will significantly contribute in generating more stable cash flow through lease income besides the new operator’s expertise will help in improving the services and products constancy. With the help of this arrangement the management can enhance property value as often lease income turns out to be more stable comparing to incomes from operations. According to Sami and Goaied (2016) reducing realty tax is another productive growth strategy for the hotel, positively affecting its income by appealing successful property tax. A component of enterprise value is often included in the hospitality properties assessments and extracting the business component from the real estate value is the key in any assessment appeal. For revealing only the value of the real estate, the hotel should extract the value of furniture, fixtures and equipment and management skills. Besides, for achieving the lowest possible assessed value research and analysis will be performed by the assessment experts. Since this is a specialized area, Hotel Pearl will engage a realty company offering professional property tax advices. The operational business of a hotel and the components of its real estate are minutely interlaced and if neglected or the mishandled, it will negatively affect the income and value of the hotel. Engaging a real estate expert is always benefitting in refinancing the asset, monetizing equity, selling assets or boosting cash flow and for the development of VCPS tool.

The funding requirement of Pearl hotel is as:

The estimated requirement of funding for Pearl hotel is 6,000,000 AUD and profitability will vary on growth.

Fig: Start-up funding estimate

Source: Author

The assumed funding issues can be high rate of interest on loans, uncertain economic situation in Australia such as recession and their impact on borrowing rate, financial securities etc. 

Pearl hotel will be funded by business partners and a portion of the capital for the start-up will even be raised through loans from bank of Australia. The strategies of funding for Pearl hotel will be intended to source funds from areas like generating 20% portion of capital for business through individual partner’s savings, raising another 20% portion from partners and rising around 60% of funding from banks.

The corporate communication for projecting social responsibility of Pearl hotels will be done through digital platforms such as blogs, feeds on webinars, social media etc where Pearl hotel will communicate directly with their stakeholders. This platform will be selected because it is highly interactive and engaging and idea or opinions can be shared faster through digital networks in form of word of mouth communications and are generally assumed as high reliable sources to convey social responsibility and development initiatives of corporate (Haski-leventhal, Roza, Meijs and M 2017).  Through digital network Pearl hotel will share their passion for emerging social cause like protection of environment, reducing carbon footprint etc to stand out, reach and engage with their stakeholders.  These digital communication platforms will create ripple effect for Pearl hotel as they have potential to reach to broader users and using social media to communicate social responsibilities will empower audiences to voluntarily engage in some of their welfare programs or fund raising events on worthy social causes.   

Moreover as digital platform is a symmetric two way communication channel so it will be beneficial for focusing on corporate public dialogues. But as these are open platforms so they will even cause complexities of debates by lowering the level of regulations on interactions between Pearl hotel and their stakeholders but despite this disadvantage Pearl hotel will be using social platforms for communication of their CSR activities and will initiate some moderate control drivers to discard unnecessary and irrelevant interactions.  As opined by Haigh, Brubaker and Whiteside (2013) these social media platforms have changed the dynamics of communication between corporate and external environment and have enabled effective monitoring as these networks give initial signals or warning on evolving issues. As such Pearl hotel can use these cases for CSR communications to identify and follow updated sustainability issues that has potential to draw public attention.

Other than these Pearl hotels will be using guest blogging on their official websites where experts and customers can share their views and can also read others opinions on vital social causes that will help to generate reputation for Pearl hotels. These blogs on websites will be given proper backlinks for strong search engine optimization and periodic contributions on blogs will allow followers of Pearl hotel to connect with one another as well as with influencers they may not be otherwise capable to reach out to share ideas, spread mass awareness on Pearl hotels CSR objectives and promoted contents.    

Financial plan

Pearl hotel is assumed to maintain a sound financial place within next 5 years. The startup will be initially financed A$ 3,840,000 by five year term loan and total capital investment of A$2,160,000 (owner 1; owner 2 A$600000 each, plus A$ 960000 from investor) source to repay loan will be cash flow created from operation; cash flow from financial growth. After initial period of 5 years, Pearl Hotel will be capable to expand.

For break even analysis ongoing cost of Pearl hotel is assumed at A$16,874 per month. Pearl hotel needs approx sales A$ 35,155 each month to break even based on assumption. Operating cost per month assumed is A$ 122,400 and average estimated sales per month is A$72,000; as such assumed to be much greater than estimated breakeven point, so Pearl hotel is likely to maintain profitability.  Pearl hotel is expected to breakeven in 3^rd moth of operations.  

As Pearl hotel is a start up venture it has three stages namely Search for Product/market fit stage, search for repeatable, scalable and profitable growth procedure and scaling/expansion phase. Also LTV: CAC value is a method to determine effectiveness of specific components of business in sales and marketing funnel which means answering valuable question whether a customer’s worth is more than what it costs to sell. So determining LTV: CAC in case of startup venture like Pearl hotel will be worthwhile and reliable only when the business would be capable to find repeatable and scalable growth procedure.  So if all initial leads are coming from inbound lead flow or paid search then assuming those channels to scale infinitely is not viable so in short, LTV: CAC estimation from Pearl hotel data can be relevant when their growth procedure would turn both repeatable and scalable, hence they should wait to determine this value.     

Team and Structure and Legal aspect   

Structure  

Tentative Skill set Matrix

Employee 1                      Employee 2             Employee 3

Proficiency level:  0= No capability; 1= Basic; 2: Intermediate level; 3= Advanced level

Interest: 0= has no interest in applying this capability; 1= is interested in applying capability  

Relationship and Connections

As per customer window quadrant matrix the Supply chain fit of Pearl hotel is determined as it is a method to understand supply fit based on customer satisfaction, level of demand and significance. According to this method, Pearl Hotel will fit in 2^nd quadrant (green) as being a start up it has offered various valuable offerings which would be high in importance to deliver high customer satisfaction.  

Value Proposition 

Value Proposition by Guest Type

References  

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