Hotel Indigo Market Penetration Strategy

This assignment requires you to develop and analyze a market penetration campaign strategy for Hotel Indigo. You'll need to identify the most suitable communication channels for this strategy, define key performance indicators (KPIs) to measure its success, and provide a budget breakdown for the proposed plan. The assignment also encourages stakeholder involvement in the implementation process.

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PROMOTIONAL CAMPAIGN REPORT
Student Name
Course Title
Professor
Name of the Institution
City and State
Date

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Table of Contents
Transmittal letter......................................................................................................................................3
Executive Summary...................................................................................................................................4
Hotel Indigo...............................................................................................................................................5
Campaign strategy.................................................................................................................................5
Concentric diversification strategy......................................................................................................6
Market development strategy...............................................................................................................6
Market penetration...............................................................................................................................7
Key decision-criteria............................................................................................................................9
Decision matrix...................................................................................................................................9
Target market for market penetration..............................................................................................10
Competition..........................................................................................................................................11
Communication channels....................................................................................................................11
Promotional mix....................................................................................................................................13
Key Performance Indicators...............................................................................................................13
Occupancy.........................................................................................................................................13
Average Room Rate (ARR)...............................................................................................................14
Revenue Per Available Room (RevPar).............................................................................................14
Market occupancy..............................................................................................................................14
Market penetration index...................................................................................................................15
Budget...................................................................................................................................................15
References List......................................................................................................................................16

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Transmittal letter
To Bradley Pitt
Managing Director
Hotel Indigo
East End, VIC 3999
RE: CAMPAIGN STRATEGY
I hope this finds you well. This is in regard to a campaign strategy developed by the marketing
team to help increase the performance and competitive advantage of the hotel. As a department
we agreed on using three alternatives; concentric diversification, market development and market
penetration. However we decided to propose market penetration because of low cost in
implementation. Attached is a report containing details on this campaign strategy. In case of any
questions, kindly feel free to contact me.
Yours faithfully
Joanna Smith
Hotel Indigo Marketing Manager

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Executive Summary
This report is based on a campaign strategy for Hotel Indigo. It is one of Intercontinental Group
Hotels based in US but has other branches spread across the world. The hotel has been
experiencing stagnation or decrease in profitability in some of its branches. This has made the
need for a campaign strategy essential. An effective campaign strategy will enables it to have a
competitive advantage and increase its market share. For this report, three strategies are
presented and a decision-criterion is used to settle on one strategy that will be easy to implement
and produce maximum benefits. Two communication channels will be used in implementing the
market penetration strategy, the use of social media and TV adverts will be used. Then, Hotel
Indigo’s main competitors like Holiday Inn and Crowne Plaza are analyzed and an opportunity to
be used by the Hotel to stay ahead of its competitors. Similarly, a rationale for assessing the
performance of the campaign strategy will be provided. Lastly, campaign budget will be outlined
and recommendations on how to make the strategy work efficiently for the company.

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Hotel Indigo
Hotel Indigo is one of the InterContinental Hotels Group (IHG) launched in 2003 in US. Since
then, it has experienced a rapid growth that has seen it operating in all the four regions of IHG’s.
It is taken a position in the sector as an upscale boutique brand which specializes in delivering a
refreshing and inviting guest experience. Although it is set to double in size the portfolio in the
coming years. Currently, there are 70 Hotel Indigo branches found within US and other
continents like Asia, United Kingdom, Costa Rica and Canada (IHG, 2017, p. 2). There are more
than 9,515 open rooms.
In 2011, Hotel Indigo was ranked highest in guest satisfaction by the 2011th North America Hotel
Guest Satisfaction Index Study. This was made possible by the dedicated staff at the hotel. In
fact, the 2010 IHG employee survey showed that 93% of Hotel Indigo employees love working
here (IHG, 2017, p. 2). Some of the services offered by Hotel Indigo include; Bar/bistro, 24 hour
business center and fitness studio, spa-inspired bathrooms, plush bedding, luxurious guest rooms,
gust loyalty programs and locally reflective designs. Moreover, the hotel provides a Priority Club
Rewards system that has more than 61 million members (IHG, 2017, p. 2). This is the largest
number in the hotel industry.
Campaign strategy
Developing a strategy needs an extensive research to understand the business environment and
main competitors. I hereby provide three strategies that could be used by the management to
move the business forward. The alternatives for the company are; concentric diversification,
market development and market penetration. These strategies are built on the nature of hotel

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management like our clients and suppliers. If implemented well, these strategies will result to an
increase in sales and the general profitability of Hotel Indigo. Then a decision matrix is provided
to help arrive at the best alternative.
Concentric diversification strategy
This strategy involves adding new or related products to the market. For example, in Britain, the
National Westminister Bank PLC bought Legal & General Group PLC.As a result, the company
recorded higher profits in consequent years (Christopher, 2016, p. 35). To make this strategy
efficient, Hotel Indigo will need to have a strong management team that can handle change
effectively. Possibly they may experience an initial decrease in hotel bookings because more
customers will be reluctant to experience new services. The management team will need to take
charge and assure staff and clients that there is no need for worry because things will improve
once customers have familiarized with the new services.
Market development strategy
This strategy involves introducing present products and services into a new geographic area. For
example, Khuzendar Company that deals in tiles introduced its products in the Gulf region (Ray,
2016, p. 42). As a result, the company made more profits and instilled customer loyalty among
its customers in that region.
Hotel Indigo needs to apply this strategy to introduce hospitality services to markets in other
regions apart from the US, UK, China and Canada. For example, there is an increase in demand
for hospitality organizations in countries like Rwanda which is experiencing an increase in the
number of tourists coming to see wildlife. Meaning, this industry is gradually becoming global

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justifying the need for Hotel Indigo to expand to other regions worldwide. However, the
management should be ready to hire more staff since expansion means a larger workforce. Also,
more resources are needed to do market research in terms of cultural orientations.
Market penetration
This strategy is used by a business when it is seeking increased market share through intensive
marketing programs. For example, Ameritrade doubled their advertising revenues to $200
million (Ray, 2016, p. 43). This move convinced consumers that the company was in a position
to make wise investment decisions.
Hotel Indigo should use this strategy to increase the rate of usage of services by customers. This
is because the hotel and hospitality management industry is not saturated (Christopher, 2016, p.
36). Moreover, the market share of big players in the industry is gradually declining hence Hotel
Indigo can make good use of this opportunity by penetrating the market more.
The social marketing theory outlines elements that could be used by Hotel Indigo to increase
market share. The main objective of this theory is to understand ways in which psychological
and societal aspects work and lead to effective mass media campaigns. Therefore, the theory is
directed towards helping identify the various social and psychological barriers that challenge the
free flow of information in mass media and suggest ways to overcome the same. For the purpose
of market penetration campaign strategy, it would be best to focus on three elements of this
theory; creating messages, right audience target and reinforcing messages.

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Usually, the first step in selling an idea, behavior or product is through making people aware of
its existence. This can be done through readily available channels like traditional and electronic
media. Having a saturation television has for a long time been preferred as the best way of
creating awareness. However, due to its high nature, people have come to adopt new media like
the Internet whose main strength is it wide audience reach. Specifically, seeking the services of
the Internet helps to reach young people, who do not use traditional media like television and
newspaper frequently.
Every type of information has its designated target. This theory holds that before packaging and
disseminating information, an analysis should first be done to determine the specific audience
that requires the information (Truong, 2015, p. 238). This helps in identifying the efficient and
appropriate means of transmitting the message. Additionally, it helps in cutting costS and
ensures that the message has reached a wide audience.
Similarly, the effectiveness of a message depends on the extent of reinforcement. This is because
people tend to forget new messages hence it is necessary to ensure that they are repeatedly
reminded of it (Morschett, 2017, p. 85). This is the main idea of reinforcing a message; ensuring
that the information does not go with the wind. Reinforcement can be done through a variety of
channels such as using mass media; conducting debates over ways in the message can be
reinforced, carrying out group discussions etc. Eventually, people are transformed into agents of
the massage through reinforcement.
To influence decisions, people may follow different paths depending on the set goals set.
Theories are not only bodies of knowledge but they also aid in decision making hence often
applied by many organizations to improve quality and productivity (Silva, 2015, p. 87). Social

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marketing theory is directed towards helping identify the various social and psychological
barriers that challenge the free flow of information in mass media and suggest ways to overcome
the same. Therefore, Hotel Indigo can improve its market share through making more people
aware of their food delivery services and the future plans to accommodate more products in their
list.
Key decision-criteria
Evaluating strategic alternatives is a difficult task. This is because the decision should be meet a
certain criteria to be implemented. This report uses the decision matrix to weigh the three
alternatives suggested. The group gives out the criteria to evaluate the alternatives. The factors to
be tested are: profitability, customer satisfaction, acceptable risk, flexibility, and implementation
ease and employee morale. All criteria are equal hence a simple ranking order is best for this
project. We have used a 1-5 ranking. 1 refers to the method that least meets criteria and 5
indicate the method that best meets the criteria. The following is a decision matrix we used to
weigh the alternatives.
Decision matrix
Alternatives Concentric Diversification market development Market penetration
Criteria
Profitability 4 3 5
customer satisfaction 2 3 4
Acceptable risks 2 4 3
Flexibility 2 2 3

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Implementation ease 3 3 5
Employee morale 4 5 3
Totals 17 20 23
From this matrix, it is seen that market penetration is the best alternative for Hotel. It will help
the company achieve competitive advantage through delivering a luxurious hotel experience that
cannot be found in or matched with any other hotel. Also, it will help the hotel maintain its
position in the hotel industry market shares.
Target market for market penetration
The target market for this campaign strategy is divided in three categories; demographics,
behavioral and attitudinal. In terms of demographic, the target market consists of 50% male and
50% female. They should be between 35 and 54 years who are married (IHG, 2017, p. 3). They
may also have children. Lastly, in this category, the market is made up of people graduates
earning between $70,000 and $200,000.
In terms of behavior, this campaign is directed at people who like staying at the hotel for both
leisure and business. Also, it is directed at people looking for something different and brand
benefits (Babbie, 2015). More importantly, the campaign is directed at people who are passionate
about intimacy and personalized experience.
Lastly, in terms of attitudes, the market penetration strategy is targeted at people in developed
countries who are lovers of technology and use it for most daily activities. People in this
category love traveling and exploring but are less worried about over the top service (Babbie,

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2015, p. 57). Similarly, they have an eye for design because Hotel Indigo is passionate about
customizing hotel rooms and experiences to local cultures.
Competition
The main competitors of Hotel Indigo are Holiday Inn, Crowne Plaza, Staybridge Suites and
Candlewood suites. One of the qualities that make customers prefer competitors over them is
budget. Compared to the 4 hotels, Hotel Indigo charges higher rates. This means that during
harsh economic times, customers prefer competitors for offering services within their budget.
According to IHG hotels survey conducted in 2010, the hotel industry experienced a shift in
market share. For example, in the previous survey, Holiday Inn had a 3% market share in the
hotel industry but by 2010, the number increased to make up 5% (Grant, 2016, p. 32). This
shows that there is stiff competition between players thus a need for Hotel Indigo to implement a
campaign strategy that will increase demand for their services worldwide.
This can be made through increased marketing programs that use social media. This channel is
effective because of new trends in the target population. Today, people prefer to use the Internet
for activities like shopping, education and entertainment. Therefore, it is more convenient for
them to search for information regarding Hotel Indigo through social media pages or referential
from friends who have used the social media and watched TV adverts.
Hotel Indigo’s main competitors have not yet implemented market penetration campaign using
social media. This is a big opportunity for Hotel Indigo. If implemented effectively, it could
increase its market share, productivity and profitability.
Communication channels

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For this campaign, we shall use social media as a channel of communicating about our brand,
create unique content, optimize content, follow-through and track results. Social media consists
of platforms like Website, Facebook, Youtube and Twitter (Haddon, 2016, p. 8). The following
diagram shows how we shall use social media to enable the market penetration strategy through
providing information, starting interesting conversations online, answering customer questions
and helping in travel plan:
Increased and improved use of social media in market penetration will enable Hotel Indigo
achieve three main things; Creating new demand, converting lookers to bookers and retaining
guests. In creating demand, it will ensure that the brand is exposed to new potential customers in
compelling and relevant ways (Ray, 2016, p. 46). Consequently, we will achieve more calls,
clicks and visits. Similarly, it will ensure that people who visit the social media sites are
persuaded to make new bookings because of finding options satisfying their needs. Lastly, using

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social media will help in retaining our guests. This is through ensuring that what we have
promised on the sites is seen through hotel experience.
Promotional mix
The main element of promotional mix to be used in market penetration is advertising. It is a form
of non-personal promotion. Therefore, the company will be required to pay various media outlets
to promote the features of Hotel Indigo’s services. Because the company has hotels worldwide, it
would be best to use a medium that has a wide coverage. For example, it could international TV
stations like CNN and BBC. Using these channels will equally contribute to increase in demand
for our hotels in regions where we are not yet established. It will also make customers used to
our hotel experience to continue booking us. Advertising will contain information on the
locations of the hotels, website, booking processes and neighborhood features. This element of
promotional mix will increase the rate of bookings thus increasing profitability.
In addition to advertising, the hotel could also employ public relations. This method will not only
reinforce the advertising messages but also create customer loyalty and favorable image for the
hotel. For example, the hotel can give regular news releases announcing its progress. Also, it can
take part in community projects.
Key Performance Indicators
To know the progress of a strategy, it must me measures against to show its success, failure or
weakness. In this section of the report, the KIPs of market penetration strategy are explained.
Occupancy

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This is the percentage of available rooms occupied during a particular period. This metric is
essential in measuring the performance of a strategy by demonstrating the efficiency and effect
on the operations of the hotel (Jorgensen, 2016, p. 339). In context of market penetration
strategy, it will help in identifying the increase in Indigo Hotel bookings.
Average Room Rate (ARR)
This metric is used to measure the average price paid per available room. This way, it enables the
hotel to measure profitability and financial performance of the strategy (Jorgensen, 2016, p.
340). If the prices of rooms go higher because of increase in demand resulting from the company
having new visitors and customers, then the strategy would be effective and should continue to
be implemented.
Revenue Per Available Room (RevPar)
It is used to measure the average room revenue per available room. It is best suited for
conducting a comparative study of past and current performance (Jorgensen, 2016, p. 342). It is
usually viewed using other factors like profitability and financial performance. In the context of
market penetration strategy, this metric helps in understanding comparing the cost of the
marketing programs and revenue generated from rooms.
Market occupancy
This metric is used to measure the demand for rooms using the average supply in a particular
market (Jorgensen, 2016, p. 343). This is made possible by data on the performance of hotel
industry on internet sites like Trending. If there are increases in demand for Hotel Indigo rooms
in a particular region, this would mean that the hotel is making progress in that area hence
contributing to the general profitability of the hotel.

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Market penetration index
This measures the occupancy of the hotel in relation to market occupancy levels. It helps in
indicating the market control of hotels based on operational parameters (Jorgensen, 2016, p.
344). This KPI enables companies to assess performance in comparison to competitors in the
market. It helps in improving competitive advantage.
Budget
Item Price days Total
1 Website designer $650 4 $2600
2 Advertising on CNN $5,000 for 30 seconds 30 $150,000
3 Website (Home
page lead feature)
$1500 4(per
week)
$6,000
4 E-newsletter $100 4 (per $400

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week)
Total monthly
budget
$159,000
This program should be run for 3 months. The web designer is necessary to improve the outlook
of the hotel’s website and other social media pages.
In conclusion, this report proposed and analyzed the market penetration campaign strategy to be
used by Hotel Indigo. Also, it provided the communication channels best suited for market
penetration and Key Performance Indicators to be used in assessing the performance of the
strategy. Implementing a strategy is a process that needs cooperation and collaboration to be
successful. Therefore, I would recommend that all stakeholders be included in the process.
References List
Babbie, E. (2015). The Practice of Social Research. Nelson Education .
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.

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Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Haddon, L. (2016). The Social Dynamics of Information Communication Technologies. The
Journal Of Internet Banking and Commerce , 5-12.
Hubble, E. (2017, February 7). 7 Food Delivery Industry Trends for 2017. Retrieved July 22,
2017, from http://www.veinteractive.com
IHG. (2017). Our Story. Retrieved August 30, 2017, from IHG: http://www.ihg.com
Morschett, R. G. (2017). Determining the Target Markets. In Developing International Strategies
, 85-104.
Ray, J. (2016). Abercrombie & Fitch: A Strategic Position.
Silva, E. (2015). Social marketing for women's health control. Journal of social marketing , 89-
97.
Truong, V. (2015). Social marketing quarterly. Elsevier , 230-248.