Marketing activities of foreign invested hotels in Vietnam and lessons for Vietnamese hotels

while external factors are still influencing them and trying to answer the following questions: What factors mainly influence customers' buying behavior? How do buyers make purchasing decisions?

Product and service analysis:

Includes analyzing the factors that create the service, evaluating the advantages, disadvantages, competitiveness and customer satisfaction of the product or service.

Analysis of operating area:

To adapt to changes that occur frequently and have a direct impact on their marketing results, hotel businesses must also promptly analyze changes and trends in the attractiveness and marketing environmental factors in their operating areas within a narrower scope (when traveling).

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Position analysis and marketing effectiveness:

Includes evaluation of the effectiveness of marketing programs implemented and the position achieved in the target market.

2. Identify target market

Market segmentation:

In this step, the hotel must first research and select appropriate criteria and methods to achieve the highest segmentation efficiency. To improve competitiveness and better satisfy tourists, state-owned and private hotels in Vietnam should choose a 2-3 stage segmentation method and combine 2-3 criteria from the basic segmentation criteria: geography; demographics; purpose of travel. The selection of specific segmentation methods and criteria must be based on meeting the market segmentation requirements stated in Chapter 1 and the specific requirements set by the hotel itself.

After segmentation, the hotel needs to outline the basic characteristics of each market segment (regarding expected revenue and profit; customer needs, characteristics, attitudes, purchasing behavior, etc.; and level of competition) as a basis for evaluation and selection in the next step.

Select target market:

Based on forecasts of development trends of the tourist market,

Based on the strategic direction of market development of the region and the whole industry, as well as based on the market response strategy and its specific conditions, the hotel will decide to choose one or several target market segments to focus marketing efforts on exploiting most effectively.

This step has two parts: assessing the attractiveness of each market segment and selecting the target market.

The attractiveness of each market segment needs to be objectively assessed through revenue and revenue growth rates, expected profit levels, competition levels, customer characteristics, marketing costs, etc. Usually, there is no market segment that is superior in all of the above aspects, so it is necessary to consider the overall criteria when assessing the attractiveness of market segments.

The hotel will choose a market segmentation marketing strategy based on the following factors.

- Business resources:

If the financial capacity, facilities, labor, etc. of the hotel are limited, then choosing a single target market strategy or a concentrated marketing strategy is reasonable. On the contrary, the hotel can choose a concentrated marketing strategy or a comprehensive marketing strategy if it has a large capital source, which is what foreign-invested hotels often apply.

- Product uniformity:

Undifferentiated marketing strategies are appropriate for products that are homogeneous or that meet the common needs of the overall market; otherwise, differentiated marketing strategies should be applied.

- Time of product appearance on the market:

The general principle is that at the product launch stage, limit the variety and type of services, choose undifferentiated or concentrated marketing strategies. When launching a product in a market where there are similar products or when the product has entered the mature stage, a differentiated marketing strategy can be applied.

- Select the desired location of the hotel.

In principle, hotels can position themselves in one of two basic ways:

o Positioning next to competitors and finding ways to increase market share: Hotels should only position in this direction when they feel they have the ability to produce better services than competitors, the market is large enough for the hotel and competitors to exploit together, the hotel has stronger potential than competitors, or this location is suitable for the hotel's strengths.

o Positioning is different from competitors: This positioning direction will allow the hotel to gain a competitive advantage, if it meets the following conditions: being able to create products that are different or superior in quality compared to competing products, production costs that allow for reasonable pricing, and having a large enough customer base that likes its products.

After deciding on positioning, the hotel needs to choose the optimal marketing-mix to create and maintain the chosen position.

3. Marketing mix strategy

3.1 Product policy:

About product and service catalog:

- For medium and large-scale hotels, with good and high-end quality, it is necessary to build a product and service portfolio in the direction of diversification and ensuring reasonable uniformity, in order to satisfy the maximum needs of customers (comprehensive marketing strategy).

- For small and medium-sized hotels, average quality should increase the uniformity of the product and service portfolio, to best satisfy the needs of one or several target market segments (according to a single target market strategy or a concentrated marketing strategy). Small-sized, low-quality hotels (not yet ranked) should build a simple product and service portfolio, including accommodation services and a few other necessary related services, each type of service should have only one quality level, to be able to satisfy the essential needs (quiet rest, clean, convenient and safe) of customers with low payment capacity, long-term stay needs or peak times.

- Hotels need to flexibly change their product and service portfolios.

suitable to changes in the market, competitive environment, stages of the product life cycle and tourism seasons in the area, contributing to increasing the attractiveness of the trip and satisfying the needs of customers.

On developing new products and services

Depending on specific conditions, hotels need to research and develop new products in the following main directions:

- Changing service elements to create new attractions, improve quality and differentiate products. This is a very diverse, flexible, effective, unlimited development direction and every hotel can do it. For example: upgrading existing facilities, creating a new service style that makes a strong impression on tourists, etc.

- Create new benefits for the product. For example, medium and high-end hotels can change the process, time and location of providing some services to better satisfy customers such as: serving guests with meals in their bedrooms at the requested time, opening the hotel service center 24/7 to be able to serve guests at any time of need, changing the procedures and booking process in the direction of increasing convenience and choice for guests while still ensuring certain requirements...

- Adding new services or new service systems to satisfy the changing needs of past customers and attract potential customers. New services or service systems can be deployed in two directions: completely new to the market or new to the hotel. The first direction rarely occurs and is usually only implemented in hotels or hotel groups with very strong potential. The second direction is quite common in reality. For example: regularly adding new peripheral services to existing products and services (such as entertainment, sports, wake-up service, passenger transport ticket purchase, etc.); or deploying package tours within the operating area to satisfy the travel needs of individual guests staying at the hotel, etc.

3.2 Pricing policy:

On factors affecting pricing decisions:

Internal factors include:

- Marketing objectives and pricing policy objectives:

For hotels that still have low room occupancy rates (below 50%), the basic goal for pricing policy should be to maximize product sales volume or revenue.

High-quality hotels and hotels in major tourist centers in the region should choose the goal of profit maximization or quality leadership, in order to maintain the advantage in attracting tourists with high spending ability, with high-quality and unique products and services, sold at high prices. In addition, in specific situations and at different stages, hotels can choose other goals such as survival, market share leadership, etc.

- Marketing-mix system:

Decisions in the marketing mix system all influence each other. In addition, the previous positioning will also influence the direction of impact between the above decisions.

-Cost: Price, cost and profit are related factors.

Vietnamese hotels need to be clear about the impact of costs on pricing decisions. Hotels need to analyze the relationship between costs and consumption in their specific conditions to determine prices (in relation to costs) so that the break-even consumption volume does not exceed the average room occupancy rate of hotels in the area or in the industry.

-Organizing the valuation:

To enhance the effectiveness of pricing decisions and make price the most effective and flexible tool in the marketing mix, the hotel's top management should only decide on long-term pricing objectives and strategies, while tactical pricing decisions can be assigned to the marketing manager or heads of production and sales departments to proactively handle within the allowed scope.

External factors include:

-Market and demand:

When setting prices, hotels must also consider how the relationship between price and demand will change across different types of markets (pure competition,

monopoly), according to customers' perception of price and methods of measuring it.

-Compete:

Competitors’ prices and their reactions to the hotel’s pricing strategy are also external factors that need to be considered when deciding on prices. If the hotel’s product quality is similar to that of its competitors, it should be priced close to their prices. If the hotel’s product quality is superior, it should be priced much higher. This way of pricing ensures healthy competition and enhances cooperation among hotels in maintaining market price stability.

-Other environmental factors:

Macroeconomic factors such as inflation, growth, recession, unemployment, interest rates, etc. all affect costs and customers' perceptions of price. In addition, the reactions of distributors, service providers, government regulations and laws on prices, etc. must also be considered when setting prices.

Perfecting pricing strategies:

-Pricing for new products

Depending on specific conditions, state-owned hotels in the region will choose one of two basic strategies: market skimming pricing and market penetration pricing.

o Market skimming pricing is pricing at the highest possible level, aiming to attract customers with high paying ability to sell new products with the highest profit in a short time. This strategy will be highly effective in cases where the hotel launches a new product or service with unique benefits or superior quality, in a market with large enough demand and low price elasticity. For example, if a new luxury hotel opens in a famous tourist area and has no direct competitors, it is best to apply this pricing strategy to attract customers with high requirements for service quality and are willing to pay high prices.

o Market penetration pricing is pricing at the lowest possible level.

to attract a large number of buyers, increasing consumption volume. This strategy allows hotels to achieve long-term profits and gain competitive advantages thanks to advantages of scale and low costs. The conditions for applying this strategy are: demand is very elastic according to price. This is considered a very suitable pricing strategy for hotels in Vietnam today, which still lack market share.

-Pricing by product category

Depending on the product category, hotels can apply the following basic pricing methods:

o Separate pricing: establish a set of selling prices (published prices) for different quality levels of all types of services in the hotel's product and service portfolio. Because the services in the portfolio have a certain correlation in terms of demand, cost and level of competition, the prices in the price set need to support each other to maximize profits for the hotel. This is an effective pricing method, and in the coming years, it is necessary to continue to apply it flexibly to state-owned hotels in the region.

o Package pricing: Instead of pricing each service separately as above, the hotel combines several services in the list into a “package” and prices the package as a whole. For example, a budget hotel can price a package that includes both a single/double room (one quality level) and one/two breakfasts. The hotel can also price several services in the package, which is called package pricing. For example, the hotel prices a package tour as a whole, except for accommodation and food services, which are calculated separately; or prices a meal as a whole, including dishes and services, except for drinks, etc. Depending on the characteristics of market demand (number of target market segments and level of uniformity in the list), state-owned hotels in the region will research suitable package types and price those packages in the most effective way.

o Combined pricing: the hotel can price a package of basic services, mandatory peripheral services, and some other peripheral services that are used by the majority of customers in the target market. The remaining peripheral services will be priced separately.

Adjust and change prices

Hotels in the process of implementing prices also need to set out principles.

Adjust prices to suit customers and changing circumstances.

3.3 Distribution policy

On determining distribution targets:

The overall objective of this policy is to increase the volume of product consumption with appropriate quality and low cost, while collecting the necessary information to grasp and satisfy customer needs in a timely manner. Vietnamese hotels need to clearly understand this objective to make appropriate choices.

Regarding the choice of distribution channel: hotels can choose one

or more of the following distribution channels

- Non-level channel (direct): the hotel directly attracts customers to consume the product.

- One-level channel (Agent, broker): Is the most popular distribution channel of the hotel system in general. Travel agents represent the hotel to sell products and services to customers.

- Two-level channel (selling agents and purchasing agents): For large hotels that consume many products and services. Hotels sell products to selling agents (wholesalers or tour operators) in large quantities, then wholesalers will resell hotel products to purchasing agents (retailers or travel agents). Finally, these purchasing agents will bring the products to customers.

- Contractual services: is a special type of direct distribution that is increasingly popular in foreign-invested hotels. Vietnamese hotels can learn by providing services to regular customers under contract and free of charge such as bringing fast food, laundry to guests, taxi to pick up guests, etc.

About distribution channel management:

- Use multiple distribution channels: effectively combine the above popular channels to reach the same or different market segments.

- Building a vertical marketing system: including hotels and distributors