International Marketing of Sheraton Hotel and Resorts - Case Study Example

Running Head: Marketing Plan Marketing Plan Customer’s Name: Institution: Customer’s Course Tutor’s Name January 15, 2013. Executive summary The investment that has been selected in this case is the expansion of Sheraton hotel and resorts in international market which in this case India has been selected. India seems to be the most probable place since it has a potential to grow and it has the necessary technological knowledge to boost investments. Also the government regulations and policies also act as an attracting aspect when it comes to investing in India. The liberisation of trade also seems to be a probable reason why the organization needs to invest in India. Irrespective of this there are a number of challenges that will be faced for example difference in culture and language barrier. The best way in which these problem can be solved is employing a great number of local employees and also be trained on the common language that is used. Table of Contents Executive summary 1 Table of Contents 2 Current product offerings 4 Country characteristics 4 Objectives to achieve 5 SWOT Analysis 5 Strategies to reduce weaknesses and exploit the strengths 7 Operational considerations 7 Human resource considerations 8 Mode of entry 8 Key macroeconomic factors 9 Marketing mix strategies 11 Price 12 Place 12 Promotion 13 Product 13 Financial considerations 13 Break Even Analysis 14 Product vision for the next 5 years 16 References 17 Hart, S. (2008, April). Editorial. Journal of Marketing Management. pp. 241-244. 17 Harvard Business Review (2000). Harvard Business Review on Business and the Environment. Harvard. Harvard Business School Press. 17 Kay, B. & Fogg, L. (2012). The Basics of Affiliate Success: Running a Business (Top Secrets of Successful Affiliate Marketing). Amazon: Amazon Digital Services. 17 Kim, C. & Mauborgne, R. (2005). Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. USA: Harvard Business Review Press. 18 Luther, W. M. (2011). The Marketing Plan: How to Prepare and Implement It. New York. Amacom. 18 Peter, J. P. and Donnelly, J. H. (2007). Marketing Management. 6th Ed, New York: McGraw-Hill. 18 Worthington, I. & Britton, C. (2003). The Business Environment. New York. Prentice Hall. 18 Company overview The Sheraton’s hotels and restaurants brand dates back to the year 1937 when Robert Moore and Ernest Henderson obtained the Stonehaven hotel. The chain of hotels attained the name from another hotel that the pair had acquired and the hotel was commonly referred to as Sheraton Hotel and it proved difficult for them to be able to chain the name since it was widely recognized and therefore they decided to call their hotels Sheraton hotels. By the year 1939 the pair had opened up three hotels in Boston and this was mainly done in their rapid expansion in the east coast. The pair later purchased the Hotel Kimball and they were able to make major transformations to the hotel and attracted famous guests such as President Kennedy. The pair also purchased two other hotels in Canada in their bid to expand internationally. In the 1960s they opened up their first hotel outside North America and it was established in Israel. It later expanded to countries such as Venezuela, Caracas. The chains of hotels were later acquired by ITT in the year 1968 and it was referred to as ITT Sheraton. In the year 1994, ITT Sheraton purchased a number of major hotels chains and mostly the Italian grand hotels company. These hotels later formed the ITT Sheraton luxury groups or the Starwood luxury collection. Starwood’s hotels and restaurants later acquired ITT Sheraton. Current product offerings The hotel offers a number of hospitality services to their customers in a bid to entice and retain them. Sheraton hotels and restaurants offers a wide range of services and products to their customers so as to ensure that the customers are comfortable and that they feel to be at the right place irrespective of the reason for the stay (Peter & Donnelly, 2007). The hotel has various rooms for their clients who may be traveling for either business or leisure purposes and despite from the fact that they [provide such facilities for their guests they also host other additional services such as offering of foods and drinks to their guests. The rooms in the hotels have been refurbished and the technological facilities have been upgraded so as to ensure that their guests are satisfied with the services offered. Country characteristics The proposed country in which the Sheraton hotel and resorts is India and mostly in the eastern coast. The Eastern coast seems to be a major center of shipping, defense, logistics and IT support. The area also services as major transport point for the industrial locations as well as other set ups that are around the place and the place is about to experience a lot of growth that will mainly be related to the hotel industry. Based on previous research which has been carried out the feeder markets have been mainly Kolkata, Delhi and Chennai just to mention a few. Globally, china, Italy, Russia and Spain seems to be the major feeder markets in the world. The recent recession mainly affected these countries and thus most businesses such as IT, shipping and logistics were in one way or another affected. However the hotel industry was able to sustain itself due to the large number of visitors that were experienced in the area due to the various government development projects (Worthington & Britton, 2003). Objectives to achieve All marketing plans are usually designed with the certain marketing objectives in mind. Marketing objectives describes what an organizations needs to achieve with their marketing activities (Harvard Business Review, 2000). The major marketing objectives of Sony in the marketing of their digital cameras are: Increase the awareness of digital cameras among the prospective target market notify the target audience about the advanced features and the benefits that are associated with the digital cameras decrease potential customer resistance to purchasing the digital cameras from Sony deliver company value to the customers as well to their partners (Peter & Donnelly, 2007) SWOT Analysis Sheraton hotels and resorts have a number of advantages that it can use to leverage its advantage and it also have a number of disadvantages that need to be addressed. The SWOT analysis below sets out to discuss the advantages that the hotel group have and the disadvantages that it have and therefore through it the company will be able to evaluate its position in the market (Luther, 2011). Strengths Weaknesses Great pricing power Innovative culture Unique products Asset leverage Financial leverage Strong management Low online presence Weak R& D High turnover Work inefficiencies High debt return Opportunities Threats New markets Fragmented markets Innovation Offering of new services and products Online marketing Poor economy Stiff competition Volatile currencies Heightened level of government regulations Mature markets Strategies for opportunities and threats Based on the fact that Sheraton hotels have a number of opportunities that it has which may enable its expansion and thus be advantageous in the market the managers need to employ a number of strategies. The company needs to offer new services as well as products in new markets. This will eventually ensure that the hotel group has a better position the market as compared to its core competitors in the market. The hotel group also needs to enhance its online marketing. Based on the advanced levels of technology that are currently in place, the hotel cannot shun away from the fact that it needs to be different from the other and thus it needs to be an active user of internet since most customers are more knowledgeable with the internet and they tend to search for all the needed information in the internet. The hotel group also needs to be innovate and aim at offering new and differentiate products to the customers this will ensure that they are better placed in the market when compared to their competitors (Kay & Fogg, 2012). The hotel group also seems to be faced by a number of threats and they need to be solves early so as to ensure that the company attains the desired level of financial gains and market share. One of the major threats that are facing the hotel is competition. A major strategy that can be adopted to solve this threat is offering of quality products as well as services to the customers and also using price discounts as a strategy to attract the customers. Another strategy can be negotiation with the government so as to ensure that it creates a fair paying ground for all the players in the market (Kay & Fogg, 2012). Strategies to reduce weaknesses and exploit the strengths The hotel group also needs to reduce the number of weaknesses facing them and also exploit the current strengths that they possess. In relation to the strengths, the management team needs to maintain and uphold their strong management skills this will ensure that they are able to expand to newer markets and they are able to achieve the required level of success. The hotel also needs to uphold its innovative culture (Kim & Mauborgne, 2005). Through the innovative culture that is present in the hotels, the organization will always be able to offer new and differentiated products to the customers and thus attracting a large customer base since most customers seems to be enticed by new and innovative products and services. The unique products that they offer will also act as an attraction aspect to the customers form all diverse backgrounds and thus there will be noteworthy additions in revenue generated from their service and product offering. Operational considerations The introduction of a product and service in a new market mainly determines the success of the product. The product will be introduced through promotional activities which will also be coupled with various advertisements in the local televisions, in the internet and also in the local radio stations (Jonathan & Jesko, 2005). The company will lay a foundation in the country and all products and services that will be offered will be from the country. The service and product will be within reachable distance in that the hotel will ensure that they have a number of hotels that are strategically located in India so as to target a large customer base. Human resource considerations Employees are essential components in an organization (Jonathan & Jesko, 2005). The company will hire local employees seems they are aware of their business environment and the needs of the people living in the area. A great number of the employees will be from India with a few of them been form the parent company. They will be tasked with various roles such as the management and all the day to day tasks of the organization. Some services will be outsourced so as to make the business more manageable and the outsourced services ought to be done in the most efficient manner as possible. Mode of entry India seems to be the best choice for Sheraton hotel to invest its services in. As it has been stipulated by the law, for an investment agreement to be signed between the parties there are a number of factors that ought to be considered so as to ensure that the agreement is effective. The agreements are usually based on the regulations and laws of the parties are more related to the business operations. Some of the regulations and laws include issuing of license, registration fees and process and the permission that is usually granted so as to operate in foreign countries. In order for the hotel to operate in India a number of entry modes been used (Kim & Mauborgne, 2005). Some of the most common entry mode that is usually used by organizations venturing foreign markets is joint ventures, licensing and exporting. Through the use of the above mentioned methods companies are able to operate in foreign countries. While making the choice on the best entry mode to use a number of aspects needs to be considered for example the speed of entry, flexibility of the entry mode, associated risks and costs. In reality, organizations seem to operate in countries which demonstrate both economical and political stability. The openness of a country to foreign investment also determines the choice of the entry mode that will be applied. Most multinational companies operating in India have used the direct investment entry mode and the entry mode had proved to be a success to them. The main advantage that is associated with direct investment in India is solely based on the fact that the economy of India seems to be performing well as compared to other countries and thus the probability that investing in India has a possibility to fail remains minimal (Jonathan & Jesko, 2005). Besides, the government of India has formed a number of economic policies that are in favor of most foreign investors and the economic policies are more related to liberisation and deregulation of the economy and it has also increased the revenues in which the foreign investors can participate (Kim & Mauborgne, 2005). In addition India seems to be rich when it comes to major technological advancements and this will be an advantageous point for the hotel in that it will be offered with a wide range of technological knowhow which will eventually lead top enhanced competition in the market. Also based on the fact that a great number of multinational companies have established there business in India the hotel will be at an advantageous position. Key macroeconomic factors Without any doubts the foreign markets are in one way macro environments and hence Sheraton hotels and resort need the PESTLE analysis in deciding the sales of their products and services. PESTLE analysis mainly deals with a careful and considerate analysis of the economic, political, social, technological, environmental and the legal factors. Numerous literatures clearly depicts that most Indian industrialists are commonly showing a significant interest in the politics of their country. Political and business seems to be intertwined and it has been noted that even some businesses tend to offer financial support to certain political parties. This is usually done in a bid to influence policies and regulations whose agenda are usually set by the political parties. Economically, there seems to be ongoing reforms that are mainly linked to liberisation of trade. This has eventually led to a boom in foreign investment which is believed to be a major driver to economic growth in a country. The economic liberisation which took place in 1991 as well as the ongoing policy changes have created an environment that tend to attract a lot of foreign investment and growth from FDI totals of less than US$2 billion in 1991 to US$ 188.6 billion in 2010 (CIA 2011). The socio-culture situation of the Indian macro-economy presents investors with the Hindustanic culture with speckles of Buddhism and Bnglish cultures. The cultural fabric has undergone numerous changes and incursions making India a mixture of diverse ethnic, linguistic, religious and caste alignments. In addition to this, the cultural fabric is not static. Intergroup and regional differences are highly imminent due to historical and socio-cultural specificity (Kay & Fogg, 2012). The differences are exemplified in areas such as living styles, occupational pursuits, land tenure systems, purchasing abilities and spending styles. To other analyists, India is said to be a soft state with most of the initiatives emanating from the central government. This is in addition to the society scoring high in uncertainty avoidance and power distance often reflected in low score on risk taking tendency and accepting change at various levels and relatively low on individualism and masculinity (Kim & Mauborgne, 2005). This has implications on marketing development as well as organizational concerns such as leadership and change management. It is imperative to note that the Indian society is highly religious with religious-related attitudes and behavior being exemplified in amost all spheres of life. Demographics indicate a highly productive population with majority being in the 15-64 age groups Technologically, India is a world exporter of softwares. This has spurred massive government investments especially in education. However, technological development varies with industries. At the macro-level, there is a good number of foreign technical collaborations. However, they are faced with strict control on indigenisation, and local impact (Kazmi, 2008). Kazmi also notes that majority of technological developments are related to multinationals indicating a strong confidence that spurs FDI growth. This is coupled with increased digitalization of systems at various levels. The legal part of this macro-economy is based on the constitution adopted in 1949 and other policies that have been instituted pursuant to that. Key provisions that may affect business operations include the fundamental rights and the Directive Principle of State Policy (Jain, Trehan, & Trehan 2009). Fundamental rights include rights on exploitation, freedom and equality. The directive policy details concerns such as work conditions, wages and remunerations, and participation of workers in management. There are regulations that provide for restrictions on the bases of emergency, scarcity, qualifications for running the business and for public interest. Marketing mix strategies When organizations wants to expand their operations to international level, is seems necessary for the organization to consider the desired level of market mix. Marketing mix is commonly referred to as to compose of the promotion, distribution, product and price (Jonathan & Jesko, 2005). For the organization to achieve have a successful transition into the Indian market, the company needs to ensure that the following measures are met: The company needs to offer products and services that are quality The price charged on their services and products ought to be right and they also ought to be customer friendly The hotel also needs to ensure that the products and services are offered in the right place and time. And in simple terms the products and services must be within customer reach Price Evidently, price as a key marketing mix sets and creates sales revenues within an organization. The prices of the pet care product to be introduced by this company within India largely determine sales made (Davenport and Jeanne 2007). It is important to set the pet care products through discovering what is largely perceived by customers on the item value. The company should engage in market research to get various customer opinions regarding their products before setting prices. Place Davenport and Jeanne (2007) asserts that, in the quest to enter the Indian market, it is necessary that the company understand that although prices of the products may vary from product to product, it is quite evident that the cost involved largely depends on customers getting right products for their customers. Place largely entails getting the desired product to a particular desired place within the specified time. Promotion It is necessary that the company engages in promotion whereby it communicates with various customers. According to Jonathan and Jesko (2005), through promotion an organization is able to obtain helpful information that will enable a customer buy their products. Clearly, the value that is largely linked to promotion normally represents sizeable proportion of the desired general cost of producing a product within India. Increase in promotional activity is a great sign of a response to that particular problem and it is considered to create a competitive advantage to the organization (Davenport and Jeanne 2007). Product Without a product an organization cannot survive. Products are considered to be focal point whereby most marketing efforts should be geared to. Understanding one particular foreign market enables an organization to know which product is suitable to sell (Jonathan and Jesko 2005). The appearance of a particular product widely fulfils requirements displayed by the Indian market while the function of this particular product determines how it will largely address customer needs. Ensuring that an organization understands the Indian market means that the company is able to engage in a desirable and productive marketing mix (Jonathan and Jesko 2005). Financial considerations When all the above factors and aspects have been considered it will be essential to obtain the necessary funds to as to start the foreign investment and for the hotel to be profitable. The money to finance the foreign investments will mainly be obtained from having many investors and also a part of the money will be borrowed. Te managers ought to make a clear analysis of the lending rate that are currently been used by various and then arrive at the most appropriate one so as to ensure that the loan is repaid within a short duration of time and for the business to be sustainable. Break Even Analysis Cost variables Optimistic -15% Most likely case Pessimistic 15% Fixed cost Rentals $5,100 $6,000 $6,900 Salaries $2,125 $2,500 $2,875 Insurance $708 $833 $958 Amortization and depreciation $542 $638 $733 Interties $1,483 $1,744 $2,006 Utilities/phone $885 $1,042 $1,198 Other fixed costs $0 $0 $0 Total fixed costs $10,843 $12,757 $14,670 Variable costs Optimistic -15% Most likely case Pessimistic 15% Cost of goods sold $69,020 $81,200 $93,380 Variable labor/wages $10,908 $12,833 $14,758 Advertising $4,250 $5,000 $5,750 Professional services $213 $250 $288 Other variable cost $6,227 $7,326 $8,425 Total variable cost $90,618 $106,610 $122,601 Sales and income data Optimistic Most likely case Pessimistic 15% Average income per customers $2,209.48 $2,209.48 $2,209.48 Average income of customer per month 88.65 77.08 65.52 Results Fixed costs per customer $122.32 $165.49 $223.90 Variables costs per customer $1,022.25 $1,383.04 $1,871.18 Break even number of customers 9.13 15.44 43.36 Number of customers over break even 79.51 61.65 22.16 Break even sales amount $20,179.52 $34,104.94 $95,811.36 Gross profit per customer $1,187.23 $826.44 $338.30 Gross profit $94,399.98 $50,947.92 $7,495.85 Product vision for the next 5 years Product vision seems to be core to the success of the business in the future. Organization and business which do not have any vision in place eventually fail since they are overtaken by their core competitors in the market. There will be the introduction of new products and services so as to meet the ever changing customer needs (Hart, 2008). There will also be diversification to other business for example in business travel so as to offer additional and convenience to our esteemed customers. Through the travel we will also be incorporation of other services such as adventure travel since most of the customers are usually on traveling for adventure and this will therefore cat as a most probable business opportunity for the business to invest in. this will eventually lead to attraction of more customers and visitors from all over the globe. References CIA. (2011, December 20). The World Factbooki-India. Retrieved January 2012, from Central Intelligence Agency: https://www.cia.gov/library/publications/the-world-factbook/geos/in.html Davenport, T and Jeanne, G. (2007). Competing on Analytics: The New Science of Winning. Boston: Harvard Business School Press Hart, S. (2008, April). Editorial. Journal of Marketing Management. pp. 241-244. Harvard Business Review (2000). Harvard Business Review on Business and the Environment. Harvard. Harvard Business School Press. Jain, A. (2009). Marketing. New Delhi: V.K (India) Enterprises. Jain, T., Trehan, M., & Trehan, R. (2009). Business Environment . New Delhi: V.K (India) Enterprises. Jonathan, G. & Jesko, P. (2005). “Boosting Returns on Marketing Investment,” McKinsey Quarterly, (2), pp. 37 Kay, B. & Fogg, L. (2012). The Basics of Affiliate Success: Running a Business (Top Secrets of Successful Affiliate Marketing). Amazon: Amazon Digital Services. Kazmi, A. (2008.) Strategic Management and business policy. New Delhi: Tata McGraw Hill Education Education. Kim, C. & Mauborgne, R. (2005). Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. USA: Harvard Business Review Press. Luther, W. M. (2011). The Marketing Plan: How to Prepare and Implement It. New York. Amacom. Peter, J. P. and Donnelly, J. H. (2007). Marketing Management. 6th Ed, New York: McGraw-Hill. Worthington, I. & Britton, C. (2003). The Business Environment. New York. Prentice Hall. Read More