Question 1 (500 points) Question 1 Unsaved
A new hotel has been opened in Downtown USA for
approximately one year. The hotel is
located in the main business district of the downtown area, which is thriving
and growing. Several new businesses have
entered that area over the past year as regentrification occurs. The businesses range from small restaurants
to specialty shops and some professional services. As a part of the regentrification program,
several new condominium style homes have been incorporated. There are currently two major groups
relocating into these complexes : the young professionals who have just
finished college and are taking jobs in the area (a part of the millennial
generation) and a group of baby boomers who have recently entered or are about
to enter into retirement. Both groups
have moved into the area for the lifestyle provided through the local
businesses.
As a part of the hotel amenities, they have offered a
variety of activities for their guests.
The main amenities that they have offered over this past year include:
Professional massage package – price: $60 for a 30 minute massage (40% PM)
Paddle boating/kayaking on the river (transport guests to
the dock which is about a mile from the hotel) – price: $25 for the first 60 minutes rental and $5 for
each additional 30 minutes beyond the first hour (35% for the first hour and
20% for the remaining hours)
Spa package (sauna, facial treatments, heated rock therapy
but does not include a massage) – price:
$95 for a 30 minute sauna followed by a facial treatment and then heated
rock therapy (30% PM)
Aerobics classes – price:
$35 for a 30 minute session (40% PM)
Based on the previous years’ experience, management has
realized that while occupancy rate at the hotel was high (80%+,) the use of the
above amenities was not. They determined
that these facilities were only being used at 45 percent capacity. To maintain the offerings of these amenities,
it is important for the hotel to increase the usage. Management decided there were two
options. Option 1 is to increase the
number of hotel guests that are using these amenities. One possible option would be to create a
package type deal. Option 2 is to
develop and promote a program for non-hotel guests from the local community.
After a quick price comparison, the hotel determined that
their pricing structure is close to the prices offered by other facilities in
the area. Currently, they desire a 35
percent profit margin on all of their price offerings; however, this is not
always possible as noted above with the prices.
As a marketing consultant, you need to address the following
questions for management:
a: You are to assemble a bundled pricing program for the
amenities of the hotel. The goal is to
combine any three of the amenities that you feel would be the best
combination. Your desire is to establish
a pricing mechanism for the bundle that would allow you to maintain a 25%
profit margin for the hotel. Explain
your pricing system, your final price you would offer, and how you determined
that price. How would your packaging and
pricing differ if you knew the price elasticity is 1.3, and how would this
impact your pricing decision?
b: Hotel management wants you to develop a package or set of
packages to offer to non-hotel residents.
They would like to see the profit margin for this package be
approximately 40%. The additional profit
margin is to cover the additional costs related to outsiders using the
facilities. Identify the primary target
market you would use for this project.
What would you offer and why?
Explain the pricing approach and final price you would use for the
bundle(s). If you know the customer
group has a high level of price sensitivity, what is your concern with this
pricing scenario?
c: Develop an IMC program that would be used for the
non-hotel guest program. Be very
specific in the program you would develop including the media platforms you
would use.
d: What, if any, concerns should management have in terms of
these actions (both programs) in terms of the brand image and equity of their
company? Be specific in your answer.
e: Create a slogan for the business, less than 20 words,
which captures the essence of the brand. Explain your rationale for the slogan.
Then show how it should be incorporated within the brand image and integrated
marketing communication plan.
