Strategy for Increasing Profitability in the Hospitality Industry

This article discusses the use of product differentiation and online booking strategies for increasing profitability in the hospitality industry. It cites studies on the impact of product differentiation and the growing trend of online food ordering. The article also provides examples of how a small café business can use product differentiation to gain a competitive edge.

Running head: STRATEGY FOR INCREASING PROFITABILITY
Strategy for Increasing Profitability
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1STRATEGY FOR INCREASING PROFITABILITY
Question 1
According to Dirisu, Iyiola and Ibidunni (2013), product differentiation strategy is the
process of distinguishing the offered products from similar available products in the market
and presenting it as more attractive in front of target market in search of profitability and
competitive advantage within industry. It is originally a part of company’s marketing strategy
as it adds value to products. Quality and design have been improved to an extent where
customers tend to perceive that there cannot be no other product as efficient as this (Davcik
and Sharma 2015). Due to its perceived quality customers become loyal and tend to shop
multiple times as they can have value for their money. Considering the case of hospitality
industry from Becerra, Santaló and Silva (2013) it can be stated, a small café business can
focus on product differentiation strategy, like innovating coffee with different use of ice
creams and nuts, use of healthy flour in pancakes and many more, would help them to gain
competitive edge without decreasing their price.
Question 2
Wherever a café opens, it takes a considerable amount of time to attract the people
and gain popularity. As described in Mohapatra (2013), in case, a café can take leverage of
online booking facilities it can be recognised to a large number of people as audiences are
more active in social networks and other food delivery applications. According to Li et al.
(2013), the tendency of enjoying food without vising a restaurant or café is increasing as
lifestyle has become busier. It has been noticed that people feel it convenient to book tables
online rather than waiting in a queue. As supported by Soegoto and Akbar (2018), a café can
proceed with clear instructions, authentic customers’ data and gain more recognition at the
same time with its wide virtual presence.

2STRATEGY FOR INCREASING PROFITABILITY
References
Becerra, M., Santaló, J. and Silva, R., 2013. Being better vs. being different: Differentiation,
competition, and pricing strategies in the Spanish hotel industry. Tourism Management, 34,
pp.71-79.
Davcik, N.S. and Sharma, P., 2015. Impact of product differentiation, marketing investments
and brand equity on pricing strategies: A brand level investigation. European Journal of
Marketing, 49(5/6), pp.760-781.
Dirisu, J.I., Iyiola, O. and Ibidunni, O.S., 2013. Product differentiation: A tool of competitive
advantage and optimal organizational performance (A study of Unilever Nigeria
PLC). European Scientific Journal, ESJ, 9(34).
Li, H., Ye, Q. and Law, R., 2013. Determinants of customer satisfaction in the hotel industry:
An application of online review analysis. Asia Pacific Journal of Tourism Research, 18(7),
pp.784-802.
Mohapatra, S., 2013. E-commerce Strategy. In E-Commerce Strategy (pp. 155-171).
Springer, Boston, MA.
Soegoto, E.S. and Akbar, R., 2018, August. Effect of the internet in improving business
transactions with online market methods. In IOP Conference Series: Materials Science and
Engineering (Vol. 407, No. 1, p. 012051). IOP Publishing.