Marketing and Customer Retention in the Hospitality Industry: A Report

This report delves into the critical aspects of marketing and customer retention within the hospitality industry, using Starwood Hotel as a case study. It begins by exploring the marketing mix, encompassing product, price, place, promotion, people, process, and physical evidence, and how these elements contribute to achieving marketing objectives. The report then analyzes customer relationship programs, specifically focusing on Starwood's Preferred Guest program, outlining its characteristics and features, such as Starpoints, membership rewards, complimentary benefits, and extra facilities, and the reasons behind its success. Finally, it proposes strategies for the development of loyalty programs, including partnering with more airlines, providing more privileges, offering customization, prioritizing regular guests, and providing gifts, to enhance customer retention and foster long-term customer relationships. The report concludes by emphasizing the importance of both marketing and customer retention strategies for sustained success in the competitive hospitality sector.

Marketing and
Customer Retention in
the Hospitality Industry

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Marketing mix..............................................................................................................................1
Customer Relationship Programme.............................................................................................2
Strategies for the development of loyalty programme.................................................................5
CONCLUSION................................................................................................................................6

INTRODUCTION
Marketing refers to a business function which allows the organizations to ensure that they
are able to reach their customers using specific strategies, methods and approaches. Customer
retention refers to the ability of an organization to retain its customers for a longer period of time
(Hamilton, Rust and Dev 2017). This report is based on Starwood Hotel which is a hospitality
company operating its hotels all over the world. In this assignment, detailed focus will be made
on the use of marketing mix, analysis of relationship marketing programme. Additionally, it will
also propose strategies for the development of loyalty programme to retain the customers.
MAIN BODY
Marketing mix
Marketing mix refers to making the use of various types of techniques of marketing so
that the organizations are able to ensure that they are able to achieve their marketing goals and
objectives effectively and efficiently (Mmutle, 2017). Therefore Starwood Hotel also makes the
use of marketing mix so that it is able to achieve its goals and objectives.
The marketing mix of the hotel is as follows-
Product- It refers to the goods or services which are provided by an organization to its
customers (Ngacha and Onyango 2017). Starwood Hotel provides the different types of services
to its customers and thereby makes sure that they are able to make the right use of these services
by getting appropriate value for the money which has been paid by them.
Price- It means the amount of money which is paid by the customers to avail the services
of the organization. Starwood Hotel sets a different range of price for its different facilities.
Therefore in this manner the hotel can make sure it is able to set a price which can attract
customers towards it. This will help the hotel in achieving its goals and objectives in the future.
Place- It refers to the location at which a business organization operates. In the context of
Starwood Hotel it means the places in the world where it operates its business. Therefore, the
managers of the hotel are required to select the right places all over the world which can be quite
effective in ensuring that the hotel is able to enhance its overall profitability level effectively and
efficiently.
Promotion- It means the strategies which are used for the purpose of promotion by the
organizations. Thus, in the context of Starwood Hotel it is very important that they are able to
1

use appropriate promotional strategies through which they can attract the customers and clients
towards them.
People- It means the staff of the organization. They are quite crucial for it because they
provide their various types of services to the company. In the context of Starwood, it is important
that it provides the right training to its staff members and ensures that they are able to handle the
complaints and grievances of the customers effectively. Therefore it is important for the HR
managers of the hotel to put their concentration and focus so that the relevant outcomes can be
attained.
Process- It means the the type of activities which are undertaken in the organization. It
means the flow through which these activities are undertaken. In Starwood, there has to be a
focus on adoption of a process through which the right hospitality services are provided to the
customers and clients in an appropriate manner. There has to be cooperation and coordination
among the different types of departments in the hospitality processes which can enable the hotel
to be able to provide its services to customers and clients thereby ensuring that they are highly
satisfied and provide positive reviews.
Physical evidence- It refers to the actual experience which the customers can have while
purchasing a product or while availing a service (Parawansa 2018). Therefore, In the context of
Starwood it is quite crucial that they make the hotel look attractive for the customers and clients
which can ensure their higher-level of satisfaction while availing the services. They should make
the furniture, overall look of the hotel attractive so that the right reviews are provided by the
customers and clients which can be very helpful for the hotel in achieving the marketing goals
and objectives both in the short-term and long-term in the future.
Customer Relationship Programme
A Customer Relationship Programme refers to a programme through which an
organization aims to ensure that a right relationship can be maintained effectively with the
various customers (Ramphal 2016). The use of such a programme can be quite helpful for the
organizations so that they are able to ensure that they are able to maintain their relations in a
right manner with their different customers. In Starwood Hotel, Starwood Preferred Guest
programme is present for the guests who are loyal towards the hotel. It is a loyalty programme
which aims at ensuring that the regular guests of the hotel are provided various types of benefits
which is a reward for displaying their loyalty.
2

The various characteristics of the Customer Relationship Programme of the hotel are as
follows-
Characteristics of organisation’s relationship marketing programme are as follows-
 It is a programme in which betterment of customer relationship is focussed so that it will
benefit the firm either directly or indirectly as they are the valuable part of any
organisation (Hyun and Perdue 2017).
 Organisation tends to focus on long lasting effect on the minds of the consumer rather
than short term by improving its service after the product is purchased.
 Needs, requirements, and demands of the buyer is understood by detailed study, research,
and analysis so that there would not be any chance of loop holes after that.
 It focusses on making good terms with the consumer and make efforts to build trust
among them as they are an integral part of a business as it cannot survive in the
competitive market without their support.
 It emphasis on making a long term as well as a lasting relationship with the customers
that are loyal to the firm and consists of a large proportion of overall buyers.
 Organisation uses best techniques that it could to lure overall customers but focusses
mainly on the people that are regular as well as loyal by ways of giving special discounts,
various type of sales,etc.
 It uses various method to reward the customers too that tends to make a good image of an
organisation which will benefit its long term growth, prosperity, and profitability.
They try to readdress the problems of the buyer as soon as possible as well as special
teams are made to solve issues that are faced by genuine as well as the customers that are an
integral part of the firm. It makes the image of the company grow in the eyes of the public as
well as in the market.
The features of Starwood Preferred Guest Programme is as follows-
 Starpoints- Starpoints are earned by the guests for their stay in the hotel. These points
can be used by the customers in different ways which ensures that they are able to use
their loyalty points in the right manner (Kandampully, Zhang and Jaakkola 2018). There
is a facility of transfer of Starpoints to frequent flyer programmes of different airlines
which thus can provide discount to the customers in an effective manner. Also, these
3

Starpoints can be used by the customers for availing discount for their future stay at the
hotel.
 Membership rewards- Starwood Preferred Guest provides membership rewards to the
guests which enables them to be able to avail certain premium facilities (Bhargav 2017).
Access to Premium Lounges, Exclusive Facilities of the hotel are provided to the guests.
 Complimentary benefits- Starwood Preferred Guest provides complimentary benefits to
the guests who stay frequently at the hotel. These benefits can be in the form of free
nights in the hotel, discount offers on bookings, access to premium suites etc. Thus these
are provided according to the points which are earned by the guests for staying at the
hotel.
 Extra facilities- Starwood Preferred Guest programme provides the guests with different
types of extra facilities which they can use as per their convenience. Offers for upgrading
the room are also provided to the guests at the hotel.
Reasons for the success of the programme-
The Starwood Preferred Guest Programme has been a success. The reasons for the
success of the programme are as follows-
 Value for the customers- The Starwood Guest Programme provides its different
customers with the desired value. They get benefits for displaying their loyalty towards
the hotel.
 Marketing of the programme- Being a large hospitality brand Starwood has been able
to do marketing of its loyalty programme. This has been able to make the customers
aware about the programme.
 Partnership with the airlines- The Starwood Guest Programme offers benefits to the
guests by providing them discount when they fly with different airlines. This offers the
customers more benefits.
 Management of the points- The Starwood Guest Programme allows the guests to easily
manage their various reward points in a highly effective manner. This enables the guests
to be able to use their reward points whenever required.
Strategies for the development of loyalty programme
Based on the conclusions from the loyalty programme which is present in Starwood
Hotel different strategies can be used so that it can be developed for the purpose of ensuring that
4

the hotel is able to ensure that it can retain its customers and clients. These strategies are
explained as follows-
 Partnering with more airlines- Loyalty Programme can be developed in the right
manner by partnering with more airlines (Jalilvand 2017). Therefore from the point of
view of Starwood Hotel it is quite important that it develops its loyalty programme
through ensuring partnership with more airlines so that its customers are able to enjoy
exclusive privileges in them.
 Providing more privileges to the customers- Loyalty Programme can be developed by
providing additional privileges to the customers (Boateng 2019). In Starwood Hotel,
these privileges can be extremely important so that the guests are able to enjoy their stay
at the hotel.
 Customization offers for the customers- Loyalty Programme can be improved by
allowing the customers customization offers. The reason for this is that the customers are
able to customize the services which they want to avail. In the context of Starwood Hotel,
these customization offers can be quite effective in offering the customers with more
choices through which they are able to manage their stay at the hotel.
 Prioritizing the regular guests- The regular guests should be given priority in the hotel.
Therefore, In the context of Starwood Hotel it is very important that the loyalty
programme must offer the desired level of priority to the customers who are regular and
stay at the hotel regularly. Therefore, it is very crucial for the hotel that it is able to
prioritize its guests in its loyalty programme which will lead to a positive feedback from
its customers and clients and its reviews and ratings will be on a higher side.
 Providing gifts- The regular guests can be provided gifts when they regularly visit the
hotel. Thus, Starwood Hotel has to make sure that it can use this strategy in the right
manner so that it is able to provide gifts to the regular customers as a part of its loyalty
programme. This will be very helpful for the guests in enhancing their experience and
this will initiate a positive review from them about the services which are provided by the
hotel.
CONCLUSION
From the above report, it can be concluded that marketing is a process through which the
overall awareness of the customers can be effectively enhanced. Customer retention is a process
5

by which the various customers can be retained through the application of strategies. Both of
them are important from the point of view of hospitality organizations. The hospitality
organizations use their marketing mix for developing their marketing strategies. The use of
Customer Relationship Programme can be made by them by providing a loyalty programme for
the regular guests. Also there can be an use of different strategies through which the loyalty
programme can be developed which enables higher customer retention.
6

REFERENCES
Books and journals
Bhargav, S., 2017. A study on marketing mix of hospitality industry. International Journal of
Management, IT and Engineering. 7(9). pp.253-265.
Boateng, S. L., 2019. Online relationship marketing and customer loyalty: a signaling theory
perspective. International Journal of Bank Marketing.
Hamilton, R. W., Rust, R. T. and Dev, C. S., 2017. Which features increase customer retention?.
MIT Sloan Management Review. 58(2). p.79.
Hyun, S. S. and Perdue, R. R., 2017. Understanding the dimensions of customer relationships in
the hotel and restaurant industries. International Journal of Hospitality Management.
64. pp.73-84.
Jalilvand, M. R., 2017. The effect of innovativeness and customer-oriented systems on
performance in the hotel industry of Iran. Journal of Science and Technology Policy
Management.
Kandampully, J., Zhang, T. C. and Jaakkola, E., 2018. Customer experience management in
hospitality. International Journal of Contemporary Hospitality Management.
Mmutle, T., 2017. Customers' perception of service quality and its impact on reputation in the
hospitality industry.
Ngacha, W. J. and Onyango, F. E. V., 2017. The role of a customer-oriented service culture in
influencing customer retention in the hotel industry.
Parawansa, D. A. S., 2018. Effect of commitment and customers’ satisfaction on the relationship
between service quality and customer retention in rural banks in Makassar, Indonesia.
Journal of Management Development.
Ramphal, R., 2016. A complaints handling system for the hospitality industry.
7