Marketing and Customer Retention in Hospitality Industry Report

This report provides an in-depth analysis of marketing and customer retention strategies within the hospitality industry, with a specific focus on The Dorchester Hotel in London. It begins by defining marketing and customer retention, emphasizing their importance for long-term organizational success. The main body of the report delves into The Dorchester's marketing mix, including product, price, place, promotion, people, process, and physical evidence. It then examines The Dorchester's relationship marketing program, the Dorchester Diamond Program, detailing its benefits, characteristics, and factors contributing to its success and potential failures. Finally, the report suggests strategies for developing a loyalty program for a full-service hotel, including determining stay requirements, forming alliances with local attractions, and effective communication of loyalty benefits. The report concludes by summarizing the key findings and emphasizing the importance of marketing mix and relationship marketing in the success of hospitality businesses.

Marketing and Customer Retention in the
Hospitality Industry

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
1. Marketing mix.........................................................................................................................3
2. Relationship marketing programme and its success and failure as customer retention tool...5
3. Strategies for the development of own loyalty programme.....................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Marketing is concerned with collection of activities and practices that are carried out for
the purpose of encouraging customers to buy services of the organisation. Customer retention
can be defined as ability of a company to retain its customers over a specified period of time.
Marketing and customer retention both are important for long term success of the organisation.
This report will contextualise The Dorchester, London, five star luxury hotel on Park Lane and
Deanery Street in London. This is also world’s most prestigious and expensive hotels in the
world. The Dorchester was opened in 1931 and has 250 rooms and 49 suits in it. Report will
discuss about marketing mix and its relationship marketing program of The Dorchester.
MAIN BODY
1. Marketing mix
Marketing mix can be defined as set of actions and tactics that are used by the company
to promote its brand. There are two types of marketing mix, traditional marketing mix involve 4
elements that are product, price, place and promotion and extended marketing mix include
people, physical evidence and process. Marketing mix of The Dorchester is as follows-
Product- This is concerned with products or service that is being offered by The Dorchester to
its customers. In this element of marketing mix The Dorchester offers luxury hospitality services
to its customers (Wu and Li, 2018). Not just luxury hospitality but also one of world’s most
iconic hotels. Along with luxury rooms and suits The Dorchester also offer dining, classic cars
and spa. Offerings of The Dorchester involve an overall hospitality services for its customers
including core products that are accommodation and food. The Dorchester is a luxury hotel and
this is why quality of the services that are offered by The Dorchester are very effective.
Place- The Dorchester is located at the centre of city London. Concerned with place in terms of
getting product to customers in order to maximise its economic utility is The Dorchester.
Because is a hospitality organisation, customers have to come to place where they can utilise
their product in terms of hospitality services. Place in The Dorchester involves international

distribution through website and agents, control of agents, this means controlling agents and
effective coordination concerned with reservation.
Price- Concerned with price The Dorchester has adopted a premium price strategy. Premium
price strategy of The Dorchester makes it expensive for customers and along with this, also
reflects luxury and superiority of the brand. Luxury products are often offered at premium price
hence The Dorchester also has luxury price policy (Abril and Rodriguez-Cánovas, 2016).
However, price of the services get varied on the basis of customers and services bought by them.
Concerned with The Dorchester it is also one of the most expensive hotel in the world and this
factor highlights price of The Dorchester. Price plays one of the most important role in attracting
customers to buy services of The Dorchester.
Promotion- Promotion is concerned with actions and strategies through which organisation
increase their appeal in customers in order to attract them to buy its services. Promotions help in
raising awareness about the product, encourage sales, creating brand image and also help in
maintaining and increasing market share. Promotions of The Dorchester are undertaken at
several places, these are offline promotions through print media and online promotions through
social media. The Dorchester has its presence on Facebook, Twitter, Youtube, Pinterest, and
Instagram and promote its brand and hotel on these sites. Promotion also involves different
activities that are advertising, sales promotion that involve loyalty programs, discounts and free
gifts.
People- This is concerned with customer service staff and employees who are responsible for
carrying out different activities of the organisation (Lahtinen, Dietrich and Rundle-Thiele, 2020).
Employees of The Dorchester are highly competent and play important role in delivering
services to customers of The Dorchester. people of The Dorchester also are supportive and play
important role in customer retention and their satisfaction with The Dorchester. The Dorchester
offers effective training and development to its employees so that they can deliver effective
customer service.
Process- This is concerned with procedure or mechanism for using services. The Dorchester is a
hospitality organisation and processes that are involved in delivering services of The Dorchester
are reservation, check-in, check-out, customer relationship management, housekeeping,

supplying necessary input, arrival and departure of guest, production of food. By completing
these procedures and undertaking mechanism The Dorchester ensures that it is able to provide
effective customer services. Supply chain management is also one of the important process, this
involve using right logistics, and supply chain management ensures The Dorchester has effective
flow of goods and services that are required to carry out hospitality organisation.
Physical evidence- Physical evidence is concerned with elements that can actually be seen by
seen or experienced when they use a service and this also contribute in perceived quality of the
service (Salman and et.al., 2017). In terms of The Dorchester its interior of the hotel, rooms, suits
and public places works as its physical evidence. Other than this, lighting and ambience,
appearance of staff, appearances on advertisement are involved in physical evidence.
2. Relationship marketing programme and its success and failure as customer retention tool
Relationship marketing program is an element of customer relationship management and
this focuses on customer loyalty and long term customer retention rather than short term focus on
customer acquisition (Sheth, 2017). This means that relationship marketing focuses on customer
retention rather than customer acquisition for short-term for once. With help of relationship
marketing The Dorchester create strong, and emotional customer connection so that their
customers select The Dorchester above its competitors. Relationship marketing programme also
known as customer loyalty programme of The Dorchester is Dorchester Diamond Program.
Dorchester Diamond Program
Dorchester Diamond Program is also known as Dorchester Collection Diamond Club. Benefits
that are involved in this relationship marketing program of The Dorchester are-
 Upgrades at the time of booking
 Daily complimentary breakfast for two (this means that two persons in a room are given
complimentary breakfast) and this can be availed in either room or in a restaurant
 Credit of 100 units of local currency can be applied for the final bill of the guest
 VIP welcome and escorting services to their room or suite are provided to guest
 In this The Diamond Club Ambassador Team ready to assist guest 24/7 throughout their
stay at The Dorchester
 Daily unlimited internet access for unlimited number of devices

 A no walk policy
Characteristics of this programs are-
 This loyalty program can be utilised by two ways by booking with certain travel agents
and by registering in Diamond Club Dorchester Collection.
 Customers are given both monetary and non-monetary benefits through this loyalty
program
 Is also a partnership program for travel agents
This loyalty services can be availed by booking through a diamond program travel agency.
Travels agents are enabled to share benefits with consumers. This means that it is a loyalty
program for travel agents rather than for consumers directly (Koo, Yu and Han, 2020).
Concerned with this, top travel agencies throughout the world are member of this diamond club.
This program of The Dorchester has been highly successful because customers or guest
do not need to qualify any specific element in order to get the loyalty program benefits. certain
factors that make it successful includes-
 No requirement to be existing customer of the hotel in order to avail loyalty program
benefits
 Travel agents when are member of this club they tend to highlight more about The
Dorchester and its services. Travel agents are important place or marketing channels and
this is why they are likely to have more significant influence on consumers. Travel agents
this way can work as effective marketing program.
 Once customer has been at The Dorchester, because of its service quality chances get
increased that they will come back to The Dorchester and this work as a tool for customer
retention.
 Other than this, services like VIP treatment, free breakfast and unlimited breakfast are
certain elements of this program that contribute in making significant influence on
customers while they stay at The Dorchester
 The Dorchester is already a luxury hotel and additional services to customers can add
overall value for them in their hospitality experience and this increases possibility for
customer retention

However, there are certain elements that might cause failure of this relationship marketing
program (Berezan, Yoo and Christodoulidou, 2016). This means that this marketing program
does not bind customers for certain visits, because it not only increases possibility of their
retention but also guarantee their retention to certain extent.
But because services offered in this, it has worked as an effective tool for customer retention.
This means that this is highlighted and given priority by travel agents this contribute in retention
of customers booking through a particular travel agent. Additionally, VIP and special treatment
received by customers contribute in customer satisfaction and this is an important contributor in
customer retention.
3. Strategies for the development of own loyalty programme
Above discussion outlines how organisation can develop and implement its loyalty
program. On the basis of this strategies for development of own loyalty program within for a full
service hotel in hospitality industry are as follows-
Determination of certain number of stays within hotel
Certain number of stays compulsory to get benefit through loyalty program of the
organisation encourages that when customers will stay in one hotel for more times they are
certainly going to get benefit of their loyalty. This also gives advantage to hotel in terms of
repeat customers. This number of stays can be deviated and also associated benefit can be
changed so that more number of guests can take benefit of the loyalty program. For example
staying for around 60 days gives highest loyalty benefit, 40 days stay reduces loyalty benefit for
the customers. This will allow more guests to get loyalty benefit and getting loyalty benefit once
will motivate and encourage guests to come again for the stay.
Alliances with local organisations offering attraction
This means that alliances and coordination with local organisations that are offering
attraction for the visitors and guests. For example- alliances with local organisations so that they
offer special and VIP treatment to guest staying certain hotel or these alliances can also be for
discount where they are going to visit while staying at hotel. This gives a feeling that they are
being given special treatment because they are staying at certain hotel. This encourages guests to

maintain loyalty and they can also be given different offerings. This means allowing and
integrating different organisation for different stays at hotel, this means that in their first loyalty
benefit they are offered specific treatment at certain organisation, in their second loyalty benefit
they can be offered discount at certain other organisation. Modifying their benefits motivate
them that they will get different benefits in exchange of their benefits.
Communicating effectively about loyalty programs
This strategy is most important because this allows customers to know about what makes
certain hotel different from others and what special benefits given hotel gives to them compared
to all other hotels. It is important that they are effectively communicated while they are making
reservations, this involve integrating travel agents, websites and travel companies and specially
websites and application from where hotel bookings can be made. Communicating loyalty
benefits through email is also an effective way through which loyalty benefits can be
communicated to customers.
CONCLUSION
On the basis of above discussion, it can be concluded that marketing mix and strategies
developed through marketing mix play an important role in success of organisation. The
Dorchester has an effective marketing mix that contributes in its overall success. Relationship
marketing that has been employed by The Dorchester is also effective and involves several
elements to maintain and exceed customer satisfaction and customer satisfaction cause customer
retention. Although there are certain elements that are not very effective but overall program is
successful.

REFERENCES
Books and Journals
Abril, C. and Rodriguez-Cánovas, B., 2016. Marketing mix effects on private labels brand
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175.
Fathy, E. and Zidan, H., 2017. Do Loyalty Program in the Airline and Hotel Industries Affect
Customer Satisfaction and Loyalty?. International Journal of Heritage, Tourism and
Hospitality. 11(3 (Special Issue)). pp.246-266.
Gumussoy, C.A. and Koseoglu, B., 2016. The effects of service quality, perceived value and
price fairness on hotel customers’ satisfaction and loyalty. Journal of Economics,
Business and Management. 4(9). pp.523-527.
Koo, B., Yu, J. and Han, H., 2020. The role of loyalty programs in boosting hotel guest loyalty:
Impact of switching barriers. International Journal of Hospitality Management. 84.
p.102328.
Lahtinen, V., Dietrich, T. and Rundle-Thiele, S., 2020. Long live the marketing mix. Testing the
effectiveness of the commercial marketing mix in a social marketing context. Journal
of Social Marketing.
Salman, D., Tawfik, Y., Samy, M. and Artal-Tur, A., 2017. A new marketing mix model to
rescue the hospitality industry: Evidence from Egypt after the Arab Spring. Future
Business Journal. 3(1). pp.47-69.
Sheth, J., 2017. Revitalizing relationship marketing. Journal of Services Marketing.
Silvio, H., 2019. The link between loyalty programs and customer satisfaction in 5-star hotels on
the Maltese islands (Bachelor's thesis, University of Malta).
Wu, Y.L. and Li, E.Y., 2018. Marketing mix, customer value, and customer loyalty in social
commerce. Internet Research.
Online
What is the marketing mix and how can you use it? 2019. [Online]. Available Through: <
https://blog.globalwebindex.com/marketing/marketing-mix/>.