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Assignment Title

Marketing strategies in hospitality Sector-

CRM Strategies of Ritz-Carlton Hotel

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Date:
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Table of Contents
1. Introduction ........................................................................................................................................... 1

1.1 Marketing Activities in UK hospitality Industry .................................................................................... 3

1.2 Theoretical Framework ..................................................................................................................... 5

1.2.1 Role of Network in Hospitality Industry.......................................................................................... 5

1.2.2 CRM & Relationship Marketing (RM) in Hotel Industry ................................................................ 5

1.2.3 Customer based marketing activities of hospitality sector ............................................................... 7

1.2.4Electronic CRM (Customer Relationship Marketing) .......................................................................... 7

1.3. Ritz-Carlton hotel –An Introduction ................................................................................................. 8

1.3.1 Marketing Strategies and Objectives ............................................................................................... 8

4.3 Marketing Communication and Brand Identity Strategies ................................................................ 9

1.4 Assessment of Ritz-Carlton Marketing Strategies .......................................................................... 10

1.4.1 Assessment of e-marketing Strategies ............................................................................................... 10

1.4.2 Assessment of Guerilla Marketing Strategies .................................................................................... 11

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1.4.3 Assessment of Viral marketing Campaigns ................................................................................... 12

1.5 Marketing and Customer Loyalty Recommendations..................................................................... 16

1.6 Conclusion ...................................................................................................................................... 17

References ................................................................................................................................................... 18

1. Introduction

In the recent era of recession, every industry is trying hard to survive and maintain its position in
the global market, same is the case with the hotel industry, which is trying hard and making
various marketing strategies to cope up with different challenges the industry is facing because
of the recession, though, not all the strategies or techniques are producing positive results but,
some techniques are producing positive results, this is the reason that, before implementing the
strategies it requires proper planning and information (Cooper et al 2007).

This report is focused at the discussion of marketing strategies and specifically, customer
relationship marketing (CRM) in hospitality industry of UK. Ritz-Carlton hotel is a profound
chain of luxury and business class hotels in UK which has gained significant growth in recent
years. The following sections discussed marketing activities, theoretical background of CRM,
and assessment of online and viral marketing strategies of Ritz-Carlton hotel.

1.1 Marketing Activities in UK hospitality Industry

The UK hotel industry utilizes various methods, latest techniques, and innovations to perform
marketing activities. According to Kotler (2009), it is also important that hospitality
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organizations should not completely replace the direct marketing efforts with the latest
technologies, but should use them as a part of sales technique. It became tough to earn revenues
for the organizations in the critical time of recessions and to make profits; companies started
using the alternate ways. As the sales started to decline, companies adopted the strategies to sell
smart instead of hard sell. Hotel industry is nowadays outsourcing the latest technologies and
innovations related to E- marketing (Stagg 2010).

In UK hotel industry, hotel industry has returned to the normal growth pattern after the recession
of 2008 till 2010 (Keynote 2012). According the hotel market report by Keynote (2012), UK
hotel industry has faced a decline of 10.5% in 2009 and fallen to the worst situation of three
years,. The report also added that the subsequent years have helped the industry to regain
strength and growth again. In 2010, the UK hotel industry figures showed a 3.5% growth and
this growth pattern continues after 2010 (Keynote 2012). Therefore, also with the other economy
sectors, hotel industry of UK has recovered after recession and started expanding with profound
marketing and promotional activities since the year 2010. The major events like London
Olympics 2012 and Royal wedding 2011 have added in the marketing opportunities for the
industry.

In this way, hospitality industry was more focused towards making strategies to achieve
sustainability in the long run and compete successfully with the rivals. According to Keller and
Keller (2009), advancements in media and use of internet have made an immense and positive
impact on hotel industry since last few years, but it does not really mean that companies neglect
the importance of direct marketing efforts, so, it is very important to make the direct marketing
strategies as a part of their business plan. According to Nicholls (2012, UK hotel industry has
experienced a slow but steady growth in last three years but prices per room have decreased in
these years, a significant factor of marketing mix in attracting more consumers through low
prices. The hotels in London have remained the centre of this progress of the whole industry in
UK and produced more yield per room with innovative marketing and promotion means.
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1.2 Theoretical Framework

Marketers have always emphasized on the aspect of retention of customers and developed
various models to capture the attention of customers. Retention of customers has its own
importance and this is the reason that, strategies related to customer retention and satisfaction has
become the part of the overall business strategies. Strategies for retention have become even
more important in the recent times because of the rapid change in the demand of customers along
with the environmental factors (Bowie and Buttle 2006).

1.2.1 Role of Network in Hospitality Industry

Internet has played an important role in diverting the attention of customers from one product to
another. Stone (2000) is of the view that the latest use of technology has provided a great
opportunity to consumers to choose their suppliers. While using internet, customers can access
many outlets at a time as against the street shopping and this is the reason that it is recommended
for the companies to participate aggressively in terms of price, quality, market share and
services. According to East (1997), retention of customers would prove to be less costly as
compared to attracting new ones, in terms of new offerings and schemes. Österle (2002) cited in
Muther (2002) is of the view that direct marketing, SCM and e-commerce are among the latest
developments which made a huge impact on retaining customers and improving the relationship
between customer and supplier. CRM can be described in the recent times as the merger of the
various functions of the business and its implication.

1.2.2 CRM & Relationship Marketing (RM) in Hotel Industry

According to Egan (2004), CRM is an improved version of the basic idea of RM and made the
task easier for the organizations to target the right and the most appropriate segments of the
market and then make marketing strategies to grab their attention. CRM is the concept which is
growing and improving with the passage of time and it will keep on improving in the coming
years. Generally, people are of the view that CRM came out from relationship management.
CRM is a tool to interact with the customers which relationship management failed to deal with.
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Greenberg (2002) mentioned that CRM is not so old concept; it emerged in the year 1999, at the
time when electronic CRM or eCRM emerged.

According to Stone et al. (2000), RM has always been focusing on consumers and their retention,
likewise, the basic focal point of CRM is also the same, it’s just that, CRM is a step ahead from
RM as, CRM is well integrated with other business functions and focuses on providing added
value in terms of services to the consumers. CRM also focuses on developing the interest of the
consumers so that they can be retained and remain loyal to the organization. The technique of
relationship marketing remained successful in interacting with consumers and creating a strong
bond with them. RM technique used to apply to the consumers according to their varied needs. In
other words, it can be said as personalized marketing and not the general marketing. The major
aspect of relationship marketing is that the marketing techniques are applied on the basis of
product offerings and the need of individuals (Pizam & Ellis 1999).

CRM is a technologically based application and is an advanced version of relationship

marketing. This technique proved to be feasible for the organizations. (Österle 2002 cited in
Muther 2002) says that organizations these days are targeting the individuals rather than the
groups and making their offerings more customized and attractive. Therefore, it would become
easy for the companies to target the right audience if they make the lifecycle of the consumers.
Using customer relationship management, organizations these days are making the products and
offerings highly customized, which was quite difficult in the earlier times. As, this is the era of
mass customization, hotels are also trying hard to target the right audience through using CRM
techniques. According to Stagg (2010), through customer relationship management, hospitality
organizations can create or develop a strong bond with their clientele, by offering customized
services and products. Hotels can also create and maintain the databases of consumers while
doing one on one communication with them. Consequently, Murther (2002) has added that
communication process also helps an organization to evaluate their buying behavior and
purchase decision. In this way, organizations would be able to understand the requirements of the
consumers even more accurately

In context of the selected organization, the technique is highly recognized in hotel industry as
seen in the Ritz Carlton, which has adopted CRM techniques. The hotel is providing customized
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services to its customers via maintaining their electronic database, which has their previous
records of their requirements, so that when they choose to come next time, the services can be
provided based on their information or record. Hotel Ritz Carlton also uses this service called
Service quality indicator, that monitors the performances of the services and its process. CRM
has proved that integration of different business functions make the work easy for an
organization to target the consumers and retain them (Ritz website 2012).

1.2.3 Customer based marketing activities of hospitality sector

There are numerous benefits on many different levels which an organization can achieve while
using CRM (Murther 2002). It is beneficial in this regard as well those, the hotels can expand or
explore new markets and offer better services based on the knowledge of the present customers.
The databases of customers can be easily used to communicate and understand the buying
pattern of the customers. Dodds (2000), cited by Egan (2004) that knowledge about the
customers would help the hotel to have a strategic edge and the companies can target the right
customers according to the information about them. Stone et al. (2000) highly emphasized the
importance of getting the information about the customers in the recent times, where the
information is not just important in making the right decision but it also works as a tangible asset
in the financial statement.

Kotler (2009 asserted that retention of customers can be maintained through the stronger bond
and communication. Organizations that are good at communicating their schemes and new offers
would be able to get more advantages. It is important to keep the brand image in the mind of the
customers, so that, once they purchased the product and remained successful in their experience,
can come again based on their previous experience.

1.2.4 Electronic CRM (Customer Relationship Marketing)

There is no doubt that the success of CRM is completely replying on the integration of
technology, specifically internet and the techniques of relationship management (Internet World
Stats 2009). Payne et al. (1998), describes eCRM as marketing should work as an integrated
functional activity in all the departments, like, human resource, production, operations, customer
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management, finance etc. According to Payne (1998), integration would make the work easy and
in this way, an organization would be able to achieve cycle times and related information about
the customers through their different and various resources, not just from a particular department
but from the integrated department, that will be providing the best quality services to the
customers. Brown (2000) is of the view that technology made the great impact on three basic
areas, that is, in maintaining database, use of internet and managing the work flow. These three
areas are core to the process of integration, which improves the functionality of the integrated
departments and provides the best technological elucidation.

1.3. Ritz-Carlton hotel –An Introduction

The hotel chain named, Ritz Carlton, is famous for providing exceptional quality services and
luxurious lifestyle. The motto of the company is completely customer focused, that is, “We are
ladies and gentlemen serving ladies and gentlemen.” The hotel chain is operating in 21 countries
having 62 hotels and this hotel chain has become the brand because of the personal touch they
deliver to their customers as soon as they enter into the hotel. The customers are greeted with
their names there (Ritz- Carlton website 2012).

1.3.1 Marketing Strategies and Objectives

Customers’ context can be made while using customer relationship management, which will help
an organization to make the different segments based on their characteristics and serve the
segments accordingly. Companies can make marketing plans by considering the recording data
base about the customers purchasing behavior and their likes and dislikes (Marvin & Cetron
2004). Organizations firstly decide about the target markets based on the available information
and then make smaller groups within the target market to easily communicate and send the
message to them. Targeting smaller group of people makes sure the accomplishment of the goal
of the campaign, which is actually the goal of any organization (Montana 2008).

Service quality and brand image building are the two main focal points in marketing strategies of
Ritz-Carlton. The stewarding a luxury hotel icon is the main responsibility of the hotel’ to
management. The challenges faced by the organization are changing consumers’ needs and
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demands, volatile economy conditions, international growth requirements, and establishing

quality standards. The ‘five point gold standard’ of the hotel is based on of the series of
objectives in managing brand identity. These five points include “1) Define and Refine; 2)
Empower through Trust; 3) it’s not about you; 4) Deliver WOW; and 5) Leave a Lasting
Footprint” (Ritz Carlton website 2012). These objectives are focused in all marketing strategies
of the hotel and target the business and leisure classes of middle and upper income groups
(McCaskey 2008).

4.3 Marketing Communication and Brand Identity Strategies

Ritz Carlton is effectively utilizing this tool of CRM in making strategies based on the
information of the customers. It can be easily evaluated about the customers’ choice of media for
the promotion of products; this can be analyzed by observing their reactions to the previous
advertisement or media. It should also be considered that not every type of media can attract the
attention of individuals. For example, e-marketing would not be appropriate for every individual,
in fact, it would be suitable for the people who are willing to purchase the products or book the
flights online and not suitable for those, who prefer to go for shopping or place an order over
phone (Montana 2008).

In process of brand building strategies, the hotel, maintains Service Quality Index (SQI) on the
daily basis in order to monitor the best services provided to the guests and resolve the problem
immediately if in case it arises at any point of time. At the headquarters of Ritz Carlton Hotel in
Maryland, administration keeps on checking the performance and SQI of all the hotels and can
analyze their services and performance immediately. Another step which the hotel has initiated
to maintain their customer service is of CLASS (Customer Loyalty Anticipation Satisfaction
System) database, which records the requirements and preferences of the Ritz Carlton Hotel’s
customers. Second database is of CARE (Clean and Repair Everything), which is actually used
to maintain the room service and rooms. These interesting initiatives by the hotel has made the
Ritz Carlton hotel a brand in the hotel industry and because of their superior quality services, the
organization has won National Quality Award twice. The ranking of this brand is improving and
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customers are fully satisfied with their superior quality services and performance (Ritz Carlton
Website 2012).
The hotel also believes in doing marketing campaigns to promote the brand identity. "Let Us
Stay with You" is one of the campaigns which has become quite popular as, this campaign is
being promoted through digital and social media and the organization is working extensively on
this campaign. This particular campaign named, "Let Us Stay with You" uses the most popular
social media websites like You Tube, Facebook and Twitter to make even the greater impact in
the mind of the customers (Stagg 2010). The hotel chain is not just using social media websites
but also making the digital videos which are working on the televisions within the hotel. In order
to increase the brand identity and enhance the image, the hotel is using print media and the latest
mobile applications for promoting their ideas and the overall campaign.

The Ritz Carlton believes in exploring the rare and exceptional opportunities and this is what
makes the brand differentiated from other hotel chains. The organization keeps on working hard
to sustain their brand image in the global market place. The hotel chain is famous for their
customer services and personal touch. During the session of orientation, workers are made clear
that the job of them is not typical, as in, they are not only required to clean the room and serve
the food but, the employees need to connect with the customers, so that they cannot forget their
experience and come again to avail these services and not just that, but the guests should also
recommend the name of the hotel to their friends, colleagues and families based on their
experience (Mitchelle 2009).

1.4 Assessment of Ritz-Carlton Marketing Strategies

1.4.1 Assessment of e-marketing Strategies

Ritz Carlton believes in interacting with its valued customers even when the customers are
actually not staying in their hotel and this is the reason that the company is aware about the
importance of social media. The company’ approach is completely customers focused and hence
the company performs according to the requirements of the customers. The organization named,
Ritz Carlton, is improving day by day by using the latest innovations and technologies and
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making marketing strategies and plans based on the available information of the customers in
order to make their complete journey memorable.

The Ritz Carlton’s primary aim is to not only retain the current customers but attract the new
customers. Both the objectives are not small, as maintaining and retaining customers’ means
continuous improvements in their performance so that the customers can recommend and
promote their brand to others. The objectives can be achieved via proper planning and making of
strategies which ensures that customers are being served according to their demands and
requirements and the organization is completely utilizing its available resources in order to make
their experience worth spending for (McCaskey 2008).

1.4.2 Assessment of Guerilla Marketing Strategies

According to Kotler and Keller (2009), guerilla marketing techniques are low cost, innovative,
and creative marketing techniques that break the clutter of information and create a long term
memorable impacts on consumers. In Ritz-Carlton, the organization has an expert team of
communication experts who work collaboratively with social media manager to improvise the
brand image. The guerrilla marketing strategies made in the hotel with the help of data mining
software contains full database of customers and their personal information. The experts’ team
evaluates the hidden trends and experience patterns of customers in past and then devise
marketing strategies on the basis of demands and experiences of the customers (Ritz Carlton
website 2012).
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Source: HubSpot (2010) used in Kotler and Keller (2012)

The Ritz Carlton promotes their brand over Face book, You Tube and Twitter and other social
media websites. Inspiring videos, company blogs, Twitter updates, publicity events, and other
promotional means are used to attract and influence target customers from business and leisure
groups. The organization uses blend of marketing tools to catch the attention of the customers
and then, provide them the best quality services according to their taste and interest to make their
total experience interesting, memorable and unforgettable (Kotler and Keller 2012).

1.4.3 Assessment of Viral marketing Campaigns

Using the strategies related to social media marketing has amplified the process of
communication with the existing customers, and once the customers are satisfied with the
experience, they are likely to come back share their experience with their family and friends and
this is how the brand keeps on growing, using the latest technology and social media websites in
order to remain alive in the global and digital world. One of the senior managers of the hotel Ritz
Carlton says that “We see that especially leisure travellers tend to use their tablet devices to
discover our hotels online. As a result, we actually see a higher ADR for reservations made
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through tablets compared to the ADR originating from desktop computers. We designed
RitzCarlton.com specifically in a way to provide tablet users with a rich and intuitive experience
– an investment that pays off since the traffic from tablet devices is steadily growing for our
website,”(Nicholls 2012).

The hotel chain, Ritz Carlton is famous for exploring new and innovative ways to attract
customers and keep them loyal towards the organization. The brand name is highly recognized
because of their highly organized customer services and their strategy of contacting individuals
on one to one basis. The hotel chain is getting digitalized with the passage of time and making
their campaign outstanding in terms of attracting both, old and new customers. The organization
has allocated around $10 million to their social media in promoting this campaign of "Let Us
Stay with You". This time, the organization has allocated more than 50% of the budget to the
digital and social media or towards overall marketing activities that shows the organization’s
focus and determination towards achieving their goal, which is, attracting and retaining the
customers (Ritz Carlton website 2012).

One of the largest campaigns of the hotel Ritz Carlton is "Let Us Stay with You," which is being
followed for the last 2 years. The organization keeps on launching the new campaigns targeting
their customers according to their needs, requirements and demands. The organization not only
focuses to deliver the requirements of the customers but they try to make their overall journey
and experience etched in their mind through delivering the best possible services and
performance. There are many competitors of the hotel Ritz Carlton, but, after the crucial times of
recession, only the hotel chain Ritz Carlton came out strongly and maintained their brand image
(Ritz Carlton website 2012).

The hotel chain believes in attracting customers while using marketing tactics and techniques
rather than attracting them emotionally as people these days wish to spend a luxurious life and
they day dream about it and the Ritz Carlton believes in providing the best experience of
luxurious lifestyle to its valued customers (Mitchelli 2009).
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The Ritz Carlton’s management believes that it is highly important to remain as a part of the
digital world as people, these days gets the relevant information by just doing a single click and
hence the company realize the importance of remaining up to date with the latest technologies.
Another important viral marketing strategy of the hotel is launch of ‘World Concierge on
Foursquare’ in order to engage travelers in their mobility (Ritz-Carlton website 2012). The goal
was to achieve the daily connectivity of potential users and customers for the hotel, what the
Ritz-Carlton employees do on a every day basis with novel consumers. The ‘concierge team at
Ritz-Carlton properties’ is some of the finest in the trade, bringing excellent information of their
neighbouring areas.
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Source: Ritz-Carlton Website (2012)

Another strong strategy used by the hotel in viral marketing is the release of its short web films
in cooperation with American Express and Saatchi & Saatchi. In these web films, individuals are
showing enjoying different activities in the hotel. The social media and YouTube were used to
market these films. According to Wall Street Journal (2008), these films have added an informal
brand building activities done buy the hotel in recent years. According to the analysis of this
report, the duration of these movies are four to ten minutes; therefore they are not easily used in
viral marketing because of long sharing time. Also their main idea was not focused at funny
images, action packed moves, or some amazing fact, therefore their success as viral marketing
tool is doubtful. The hotel has tried to use the full potential of social media by posting the trailers
of these films on major social sharing channels like YouTube, Facebook, but if they reduce the
time of these short films and increase viewers’ engagement through some stunning aspects then
these movies can play their role more effectively.
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Source: Ritz-Carlton website (2012)

1.5 Marketing and Customer Loyalty Recommendations

I view of the above discussed marketing and promotion strategies of Ritz-Carlton hotel,
following recommendations are given for the betterment of CRM strategies and enhancement of
customer loyalty.

1. Evaluation of social media and viral campaigns can be easily done via getting the
feedback from the customers with the help of CRM techniques. Therefore, Hotel has to develop
integrated marketing communication portals to facilitate the analysts in classifying and
summarizing the collected information from customers’ feedback. New applications and media
have made the task of collecting feedback quite easy and convenient. There can be different
campaigns and the related feedback like e-marketing, which includes promotion through emails
and also getting the feedback through emails. This customer feedback and proper management
responses in the areas of service quality, technology enhancements, and innovative facilities will
increase customer loyalty to the brand.

2. The overall process of targeting the right segments and evaluating the feedback has become
increasingly convenient and sophisticated after the advancement of social marketing tools and
internet technologies. On the other hand, consumers’ privacy breach issues and information
overload are also some big concerns in utilizing viral campaigns and Guerrilla marketing for the
hospitality industry. Therefore, Ritz-Carlton management has to balance the social media
relationship marketing campaigns to achieve desired goals and to avoid the customers’ privacy
breach issues. Customers’ engagement and employees’ Involvement strategies can help to
achieve the insight in customers preferred mode of communication.
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1.6 Conclusion

Since the technology has become better, the process of interacting with customers on the
individual basis has become easy. CRM helps and organization to make the prompt and the most
accurate decisions based on the customers’ choice and preferences. The importance of using
CRM technique in today’s fast paced era cannot be neglected. Therefore, company needs to
allocate maximum budget to CRM activities in order to establish long term commitments with
the customers. In this report, the selected organization in hospitality industry was Ritz-Carlton
hotel chain. The hotel is famous for luxury, high service standards, and effective consumers’
engagement initiatives. The customer relationship marketing strategies of the brand are focused
on effective use of social media and internet for viral and guerilla marketing campaigns.
Interactive campaigns like ‘World Concierge on Foursquare’ and "Let Us Stay with You" are
analysed in this report. It is concluded that hotel is using innovative and low cost strategies to
attract and retain customers with the hotel offers. The effective and consistent use of CRM
strategies through social media and control on privacy breach issue will enhance the consumers’
loyalty in future.
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