The paper "Strengthening the Brand with Digital Marketing" is a good example of a marketing assignment. Accor’ s current distribution strategy involves the use of online platforms which accounted for 35% of the sales made. The strategy is mainly based on a 60/40 relationship between direct bookings from its own digital efforts through its website and the indirect bookings derived from the partnership with OTAs. The existing OTA relationship with the company is valuable. This is because they assist to bring in new customer bases in certain regions of the world where the company has not penetrated.
A key challenge however in this relationship is that Accor has to pay OTA commission. The commission is actually quite high. Accor should proceed with the working relationship with OTA. As Dent, (2008) argues, the main objective of a distribution strategy is to get the product to the customers. An effective strategy should therefore not just get the product to the customers but it should also ascertain that a wide population is reached by expanding the customer base. OTA is also beneficial because it brings to the company first-timers.
Increasing the number of first-time customers is advantageous because when retained they may join the loyal customer category. What is evident is that the relationship with OTA generates new customers for the company. This basically implies that this relationship is valuable in growing customer bases. Also as noted from the case, although Accor’ s management acknowledges that OTA eats too much the partnership is still beneficial. OTA has a long-standing reputation in e-commerce and as a result, its standing there is needed to maintain the relationship prior to Accor coming up with a more prolific and renowned e-commerce distribution platform. How to manage the relationship In order to manage the existing relationship between Accor and OTA, one of the plausible approaches is to ascertain that the new customers brought in by OTA are provided with effective services which in turn will make them loyal customers.
The loyal customers will then make direct bookings from Accor’ s website. The relationship will therefore solely be based on finding new customer acquisitions. This will reduce the conflicts that arise within the distribution channel. In most cases with the rise of e-distribution systems, conflicts often arise between hotels and e-wholesalers.
A study conducted by Myung et al (2009) disclosed that the partnership between e- wholesalers are often a controversial one due to areas of conflict such as the need to control prices, similar customer bases and the development of direct web channels by hotels. In order to manage the relationship between the two partners, the role of OTA should precisely be cut out which is finding new customer acquisitions. This will assist in preventing further conflicts that may arise in the relationship. Adopting an effective control mechanism is another viable way of managing the relationship between the two partners.
This can be done by implementing contractual control and ensuring that the requirements of the contract are maintained at all times. The contractual control is basically a mechanism through which the two parties clearly describe their rewards and responsibility in the distribution channel. Each party is therefore obligated to meet the requirements of the contract at all times.
Dent, J . (2008). Distribution Channels: Understanding and Managing Channels to Market. Emerald Group Publishing.
Intel Retail. (2014). ‘Creating the Next-Generation Digital Hotel: Streamlining operations and delivering the guest experiences that drive competitive advantage’.
Myung, E, Lan Li, L and Billy Bai , B. (2009). Managing the Distribution Channel Relationship With E-Wholesalers: Hotel Operators' Perspective. Journal of Hospitality Marketing & Management , 18(8), p21.
Schegg, R. (2014). European Hotel Distribution Study: The Rise of Online Intermediaries Special Focus Switzerland. Accessed August, 26, 2014.