Business Positioning Strategy of Ritz-Carlton: An Analysis

This article analyzes the business positioning strategy of Ritz-Carlton, including their target market, competitor analysis, SWOT analysis, product positioning, marketing mix, and competitive advantage. It also discusses their diversification strategy for future development.

1. Introduction

1.1. Company Background
The Ritz-Carlton Hotel Company, L.L.C., of Chevy Chase, Md., operates over eighty – five
hotels currently, in Africa, America, Asia, the Caribbean, and the Middle East. There are over
thirty hotels and residential projects under development around the world. It is located at
prime destinations around the world, offering luxury hotels where it sets high standards along
with superior service for the hospitality industry. The model of Ritz Carlton is divided into three
main areas: service, product and location. They are well- known for their service which is the
“ladies and gentlemen serving ladies and gentlemen”. Buildings and rooms are ensured to
look perfect, starting from decorations to private baths, which costs them around $500,000 or
more. Lewis (2014) mentioned that they find the best possible locations to satisfy customers
with luxury demands. The Mariott International (2015) has stated that the purpose of Ritz
Carlton is to promote the publicizing quality strategies that are successful quality awareness,
and the quality of companies’ achievements.
The Ritz Carlton (2018) has mentioned that they have expanded to Singapore in 1996 and
named their branch in Singapore as “The Ritz – Carlton, Millenia Singapore (RCMS). It was
owned by the Pontiac Land Group and was managed by the Kwee brother, where there is a
32 floor high – rise luxury and leisure hotel. It has a total of 608 guest rooms and suites along
with 2 panoramic view of Marina Bay and Kallang.
1.2. Methodology
In this portfolio, the research will be based on both primary and secondary methods. The
secondary method is used to research the company background, in order to have a better
understanding about them. It is also used to do a research on the existing business
positioning strategy and the future development plans of the hotel. A primary research has
been done on the business operation and the services of the hotel.
2. Business Positioning Strategy

2.1. Target Market
Target market is where each of the market segments are being evaluated on their
attractiveness, and will the selected segments will enter. Ritz Carlton starts off by
targeting the four main segmentations, which includes personal travels like luxury and
spas, weddings, special celebrations, business professionals, and residences and
club. What consumers look for in hospitality are based from these four categories. To
promote the products Ritz-Carlton has to offer, consumers are directed to a specific
page depending on the groups available at the top of the website. It also gives
information regarding the benefits of each of the amenities when a guest chooses to
stay at Ritz-Carlton. In terms of marketing, Lewis (2014) has mentioned that the Ritz –
Carlton uses several outlets and social media to connect with the customers for each
segment.
2.2. Competitor Analysis
Among the most significant competitors of the Ritz Carlton company such as Hyatt,
Hilton, Accor Hotel is on the top. The Accor Hotels is the only hotel groups recently that
is present in all the market segments. This group fulfills all the special treatment,
comfort, leisure and services that the customers need. The annual revenue the group
earns by serving in the hotel industry is $ 3.9B and almost 250,000 employees work
over here. Sebastien Bazin is he chairman and CEO of the company. The group is so
popular that it has more than 62.9 K followers on Facebook and Twitter. The group is
adopting sustainable development initiatives such as child protection, engaging in local
development, advocate fight against epidemics, promote balanced nutrition for the
workers of the company, the host communities and the customers. The group is also
stepping towards spreading environmental awareness, AIDS and malaria protection
awareness which makes them unique from the other hotel companies in the industry
(Accorhotels.group, 2018).
2.3. SWOT Analysis

2.3.1. Strength
The Ritz – Carlton(2018) has mentioned that they have a lot of strengths that
includes brand image, gold standards, outstanding service and passionate
employees. Their brand image is a major factor on their success, and its brand
image was recognized around the world as the top luxury hotel chain that has
amenities and high quality room offered, has an unbeatable customer service and
superior locations. Both guests and employees are benefited from this service, as
employees are more passionate and feel empowered when doing their jobs. This
will make the experiences of the guests to be unforgettable.
2.3.2. Weaknesses
Lewis (2014) stated that although the brand image of Ritz – Carlton is the major
factor for them to be successful, it also disadvantages them by the costs for
maintaining their brand image and it could discourage potential consumers. Arias
(2016) has mentioned that since the Ritz – Carlton is a luxury hotel, spending the
night there will cost starting from $500 to $10, 000 per night, which costs more
expensive than they should be. Therefore, Lewis (2014) mentioned that the Ritz –
Carlton needs to continue setting high standards on their brand and create more
values for the guests, for them to stay being competitive. Other than that,
employees need to have high-standards when hired. Therefore, Arias (2016)
mentioned that it can be stressful as most employees might not match with their
standards.
2.3.3. Opportunities
Arias (2016) stated that the opportunities of Ritz – Carlton involves in attracting new
guests through adding the spa facility to existing and to new locations, through
promoting and improving of the hotel security, by enhancing and expanding their
corporate social responsibility, opening of new hotels in undeveloped countries and
through sponsoring of events.
2.3.4. Threats

Arias (2016) mentioned that the Ritz – Carlton faces threats like pricing wars and
tougher competitions from companies like Four Seasons Hotels Inc., Starwood
Hotels & Resorts Worldwide, Inc and etc. Ritz – Carlton had a huge impact, for
being a worldwide economic recessions, on profits and revenues when the
vacancy rate increases because of guests travel cuts. It also increases terrorism
threats which became a problem to the hospitality industry. Therefore, it directly
and negatively affects the ability of Ritz – Carlton to generate the revenues.
2.4. Product Positioning
The term product positioning refers to the qualities that distinguish the company
product or services from services that the competitors offer to the customers. It is the
position where the company product or services fit in. The well reputation of a company
service enables them to pose in a broader success scale. The Ritz Carlton company
communicates properly with their customer via their personal magazines, social media
sites to make them aware of their newly launched products and services. They have a
great social media presence and their cost-friendly services attract the customers more
than other companies (ritzcarlton.com, 2018).
2.5. Marketing Mix
2.5.1. Product
In Singapore, the Ritz – Carlton was considered as a famous and a comprehensive hotel,
where their main product has accommodation, catering, conference meeting venues,
foodservice and Spa. What makes Ritz- Carlton famous in Singapore and in the region is
because they draw guests with their supporting services and a complete variety of
augmented services.

For their facility products, they have over 35 000 square feet of space for meeting that are
equipped with the recent conference equipment. The guest rooms are equipped with an
exclusive bathroom along with iconic octagonal windows, or also known as Feng Shui.
This hotel is the La Mer and the first cooperative hotel in the Asia Pacific region. It has 24
hours of outdoor swimming pool facilities and gym. Each guestroom and public area has a
high speed and free internet access with 1Gbps bandwidth. It provides catering services
and conference meeting venues. This hotel also has a gift shop that sells costumes,
crystal utensils, designer jewelry and several signed items of Ritz – Carlton.
2.5.2. Promotion
The advertising team is prohibited to market to any companies for the hotel to
maintain its brand standard. Their strategy is to not making mistakes when
collaborating with some marketing channels. Arias (2016) mentioned that the
company uses email promotion, advertisements on some magazines and their
private magazine; like advertising network, as their marketing tool instead of
utilizing televisions. The Ritz – Carlton (2018) mentioned that their company uses
rewards programs for their loyal customers to promote and as partnerships with
companies like Neiman Marcus and JP Morgan Chase & Co, collaborating for their
products to be advertised. Arias (2016) mentioned that the company stays
committed to their service and follows a brand standard which benefits them
through positive customer ratings, a lot of high – ranking rewards and Word – To –
Mouth marketing. Therefore, Ritz – Carlton will not have to spend too much on
advertising through mass media channels compare to those companies that
advertised through those channels.
2.5.3. Price
If the Ritz – Carlton hotel holds events like Formula One Race or tourist peak, the
price of the room will increase tolerably. Nevertheless, Ritz – Carlton will have to
offer promotions and discounts if it encounters a low occupancy rate. The prices of
the room are divided into double or single occupancy, that exclude taxes, fees, tips,

etc., which are not for groups or other offers are not to be combined with,
appointment should be made beforehand, and it is not for reward exchange.
2.5.4. Place
The Ritz – Carlton, Millenia Singapore (RCMS) is located at 7 Raffles Avenue,
which is known to be at the heart of the Marina Bay in Singapore. This hotel is also
close to the Skyscrapers of Singapore, the Museum of Arts and Sciences, and the
Esplanade. Those are some of the tourist attraction in Singapore where Ritz –
Carlton is located close to them. This location is convenient for the guests.
2.6. Competitive Advantage
Based on Philip (2013), the differentiation strategy was known to be where the
company decides on a product attribute to put their focus on. For this strategy to work,
the company needs to select an attribute that has a huge section in the market care
that is enough for their products to be paid at a premium price. This strategy allows
some products to co – exist if they are being focus on different attributes. Therefore,
the company should make sure that they charge at an enough premium price which
covers the focusing costs for chosen attributes. If the market did not value their chosen
attributes highly enough, they will be likely to be at below average returns.
Tulldahl (2012) has mentioned that the feature of differentiation, the company could
deliver the product that is from the functionality perspective, and the product that looks
quite similar compared to their competitors. In this case the differentiation features
comes from the product feature instead of the fundamental functionality. As an
example, this might include attributes like brand, price or quality. These days, the
luxury hotel chain of the Ritz – Carlton has become famous for its outstanding service
and is shown to be an example on how it effectively leverages the service with the
mean of differentiating with another commoditized product.

The Ritz – Carlton (2018) mentioned that their Gold Standards has established necessary
series of statements which defines which type of company it wants to be and containing
several elements which outlines the significance of an outstanding service. Under the Gold
Standards, there are the 6th Diamond, Employee Promise, Motto, Three Steps of Service,
Service Value, and the Credo. One of the Credos that were written in the Gold Standards is
the aim of the service concept to be cleared:
“We pledge to provide the finest personal service and facilities for our guests who will
always enjoy a warm, relaxed, yet refined ambience. The Ritz-Carlton experience
enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and
needs of our guests.”
In Ritz – Carlton, the employees will need to gather for around 15 minutes for the ‘line-
up’ daily. This was done to resolve any possible matters, and is also used for as an
effective vehicle for implementing and improving the service concept. Daily, the Ritz –
Carlton will update on their page about the new success story. The story posted will be
describing about the employees that have made outstanding efforts when delivering an
exceptional service for the Ritz – Carlton guests.
3. Existing & Future Development Strategy
3.1. Diversification
Grimsley (2018) has mentioned that as the business expands to a new market or develops
new products is where diversification happens. Businesses might frequently diversify when
managing the risks through the minimization of potential harm towards the business when
there is an economic downturn. Basically, this was done to expand the business for
business activities that will not react negatively towards the same economic downtowns to
be the current business activities. If one of the business enterprises making a hit in the

market, one of the other business enterprise might help to balance out the losses and
keeping on making the company manageable. The business can use diversification as their
growth strategy.
Poplawska (2016) mentioned that the Mariott uses the diversification strategy as they are
the corporate- level strategy. Firstly, it partner up with well – known airlines like the British
Airways, on the rewards programs. The customers are allowed to use their membership
number of Mariott to get cheaper prices for their tickets. They also have the authority on the
used incorporate miles by air travel to gain reward points and use those points for
discounts and upgrades for their future travels.
Additionally, the Mariott linked their own reward program to the Ritz – Carlton rewards
program and it has recently acquired the rewards program of Starwoods. This benefits the
customers and the company. The Mariott will gain new and loyal customers while the
customer will have more chances of earning and using their travel points. In general, the
guests will have more ways on earning points through the diversification partnering up with
airlines. It will build scope economy by sharing resources, transferring of core
competencies, knowledge, and value chain activities. As both airlines and hotels are part of
the hospitality industry, they have the same customer base. As a result, the Mariott
partnering up with most airline organizations will benefit both companies for a bigger
market power which offers them more profits and being more competitive.
3.2. Business Model
Bandyopadhyay (2014) has stated that the business model of the Ritz Carlton can generally
be focused on the three main areas, which are the experience, affiliated partnership and
people. Firstly, the chosen business model will want to have many attentions for the
preparation and the quality of the hotel personnel, and as a result the Human Resource
Management (HRM) is the company’s heart when plan for long-term. Personal preparation
and the training will come when the time consuming site selection, concept development and
the renovation of the facilities, as this is important in order for the company to succeed. Next

is that the Ritz – Carlton follows the market customization strategy which allows personalized
and unique experiences for each hotels, to make sure that the guests will feel that their
experience is unique. Last, Jeszey and Dunk (2003) mentioned that the development strategy
of the business model and the HRM is part of the strategic partnerships with the
nongovernmental bodies and local government, that lets the different services and hotel
staffing like bars, unique restaurants and other facilities in the hotel.
3.3. Recommendations for Future Development Plans
The Ritz – Carlton sets high standards when services are delivered to each guest that walks
to the hotel. Nevertheless, in the hospitality industry business, every guest will experience a
negative and/or a positive stay. The reason is that there are two most visited websites like
Yelp and TripAdvisor, where the guests can rate the properties in the hotel and give
comments on the hotel. In the TripAdvisor website, the guests can write recommendations or
problems encountered when they are staying in the hotel. There was a guest who complaint
on the noises from the walls and hallways, not good enough warning when there is a private
event, and closing time of pools, written on 6th March 2014. The hospitality industry is
expanding in the 21st century, especially when the use of social medias has become viral.
Arias (2016) mentioned that before the guests decide on where to stay, current guests or new
guests will firstly look at social media to see reviews and ratings for enjoying their stay in that
particular hotel. This is the reason social media affects the business.

(3, 000 words)
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