Marketing Strategy of Kempinski - Research Proposal Example

Marketing strategy of Kempinski Contents and History 3 2. of offer 3 3. Target market 3 4. Criteria for Market segmentation 4 5. Competition 4 6. Positioning against competition 5 7. Environmental analysis 5 PEST 5 Swot Analysis 6 8. Marketing Mix 7 9. Conclusion and recommendations 8 Reference List 10 1. Description and History Kempinski is a global hotel chain with its headquarters in Geneva, Switzerland. Currently, Kempinski hotels are present in 30 countries across the globe. The brand operates through 75 five star hotels. Reto Wittwer is the present CEO and Managing Director of the company (Kempinski, 2014a). The global hotel chain engages more than 20000 employees. The company’s majority stake is held by CPB Equity from Thailand. The hotel chain was launched in the year 1897, which makes it the oldest group of luxury hotels in Europe. The hotel business had boomed till World War I. The wine trade business of Kempinski has been quite active from 1862 (Kempinski, 2014a). However, after a short stagnation period, the company again flourished in Berlin. In the year 1872, the hotel chain was extended to Berlin. Then again, during World War II, the hotel at Berlin was completely destroyed. In 1994, Kempinski was taken over by Dusit Sindhorn by acquiring 52 percent stake of the hotel chain. This joint venture between Dusit and Siam Bank came to an end, when Dusit sold off the hotel chain to the latter (Kempinski, 2014a). 2. Description of offer This hotel chain is known for its deep-rooted traditions. Being one of the oldest chains of hotels in Europe, Kempinski provides a unique offering of cultural heritage and traditional architecture. As already mentioned, the hotel group has 75 hotels spread across 30 countries (Kempinski, 2014a). Nonetheless, the company is continuously expanding its base by adding new hotels in Middle East, Europe, Asia and Africa. The offerings include a portfolio of city hotels, historic hotels, residences and resorts. Few of the hotel brands that are famous worldwide are Berlin’s Adlon Kempinski hotel, Abu Dhabi’s Emirates Palace, Dresden’s Taschenbergpalais Kempinski hotel and Instanbul’s Çiragan Palace. The owners of Kempinski are also associated with establishing a global alliance of hotels that is active worldwide (Kempinski, 2014b). 3. Target market Kempinski caters to a wide range of customers in the premium and luxury segment. The hotel group’s target customers include wealthy and high profile individuals travelling for leisure, vacation or business. The hotels also cater to various incentive groups and business conferences. The hotels offer unique locations for meetings and seminars. The hotels support various restaurants, bars, spas and clubs; many of these are open to outsiders too. Thus, the hotels also offer services to outside customers. 4. Criteria for Market segmentation Market segmentation for Kempinski can be done according to specialty of its hotels. Kempinski operates across various categories, namely grand and city hotels, resorts and residential buildings (Kempinski, 2014b). City hotels: Luxury hotels are basically targeted towards customers who travel for short durations, such as, two or three days. These trips are generally for business purposes. Individuals also use luxury hotels during global tours. As a result, the offerings are charted out on the basis of their requirements. Grand Hotels: These are exclusively directed at high profile customers such as, top government officials, global heads of organizations, international celebrities, top class bureaucrats and other individuals with high political and social power. Resorts: Kempinski’s luxury chain of resorts serve customers who want to stay for long durations. As a result, target customer segments here include newly wedded couples, families on vacation as well as company funded holidays. Residences: Kempinski residences constitute luxury chain of residential buildings that are targeted at high profile customers aiming for premium housing options. These are tailored according to the requirements of families buying these residential flats and buildings. 5. Competition As an up-market global hotel chain, Kempinski competes with five-star, seven-star and other luxury hotels, wherever their base might be. Even so, major global competitors of Kempinski are The Ritz-Carlton Hotel, Four Seasons Holdings and Movenpick Holding. Movenpick is a major competitor for Kempinski in regions such as, Germany, Austria and Switzerland. Ritz and Four Seasons have a similar expansion pattern and customer base, taking away large chunks of customer share (Hoovers, 2014). 6. Positioning against competition In order to gain competitive advantage over its competitors, Kempinski leverages its rich cultural heritage and tradition. The brand is more than 100 years old and as a result, has a huge knowledge base regarding customer trends and their changing patterns. The outlet concepts and positioning strategies have been developed at very early stages. Few of the characteristics to differentiate Kempinski from the competitors are its room designs, food and beverages offerings and design offerings. The brand also boasts of recruiting highly trained and professional staffs for better quality services (Lawler, 2008). 7. Environmental analysis PEST Since majority of the hotels of this global hospitality brand are situated in Europe, the PEST analysis will be conducted for the European market. Political: Europe has a regulated and rigid political environment. However, firms abiding by the government rules and policies have the liberty to use their full potential. The hotel industry is subjected to various policies and regulations such as, safety of customers and travellers, property ownerships, corporate governance, patents, employee health as well as employment conditions. The government policies also include setting standards, which every industry or organisation need to comply; for example, government inspections of a service or product before public launch (Ferrell and Hartline, 2010). At present, political conditions in Europe is chaotic and disruptive because of issues among internal nations and dissolving ties with the United States government (New York Times, 2014). Economic: The current economic environment is volatile, making both customers and industries cautious. While customers are opting out of leisure travel or vacations at the moment, hotels are also trying to cut down costs by slashing remunerations, freezing new recruitments, assigning multiple tasks to employees as well as cutting down extra benefits or offerings to customers. The current situation has also forced organisations to plan for out-of-the-box and creative marketing strategies so as to obtain maximum revenue with minimum investments (Giannotti, Mattarocci and Spinelli, 2011). Social: Europe as a whole is regarded as a developed and one of the most powerful economic segments of the world. People enjoy high disposable income and living standards. As a result of increasingly changing lifestyle and lack of time, customers are now demanding products and services with multiple offerings (Marieke, 2004). Hence, industry trend suggests increasing number of partnerships and contracts with complementary products and services. For instance, hotel industry is increasingly associating itself with transportation services and travel agents for providing all-round services to customers. Technological: Being part of a technologically advanced economy, customers expect to be connected round-the-clock. As a result, advanced research as well as IT has become an integral part of any new service or product offerings (Bilgihan, et al., 2011). Hotel industry is increasingly utilising these opportunities for enhancing connection with customers. For instance, customers tend to use mobile services for most of their tasks such as, booking, payment and information search. So, apart from creating a traditional advertising and promotional platform, firms are trying to provide their offerings through mobile and other shared sites such as, Facebook (Haberberg and Rieple, 2008). Swot Analysis Strength 1. The hotel chain is known for its unique styles and attributes, differentiating each hotel from another. 2. All hotel chains are connected through shared platform providing information about customers, demand and stay patterns as well as shifting trends, thereby helping in establishing appropriate strategies for advertisement and promotions of the hotels. 3. Regular audits, compliances and monitoring help to maintain standards and performance of the hotels; this improves degree of satisfaction among customers. 4. The company’s global alliance helps in driving incremental revenues as well as ensuring cost savings for member groups; this alliance also offers enhance service and satisfaction to customers (Kempinski, 2014b). Weakness 1. Recent economic slowdown has forced organisations including hotels to cut down their employee benefits and compensation package, which in turn has resulted in high attrition across hotels (New York Times, 2014). 2. Kempinski falls in the category of premium hotel chains catering to a niche segment. As a result of this, expansion and growth opportunities are limited. Opportunity 1. The brand has opportunity to diversify its business, catering to customers other than its current target segment. 2. The hotel chain can also expand its base to new, emerging and rapidly developing markets. Threats 1. Global economic slowdown is considered as the prime cause for customers to opt out from leisure travelling. Even businesses are choosing cheaper means such as, video-conferencing, for saving costs. This has affected the hotel business significantly (Janet, 2002). 2. Recent disruption in European nations has also forced travellers to opt out of any vacations across these regions, further reducing occupancy in hotels (New York Times, 2014). 8. Marketing Mix Product: Hotels come under the service industry. The service strategy followed by the global hotel chain is providing unique and differentiated service to its customers. This hotel group currently offers a range of hotels, resorts and residential buildings. Since Kempinski hotels are placed in the luxury segment, product differentiation strategies are implemented on the basis of uniqueness and offerings. These include recruiting highly educated and trained staffs, selecting locations of strategic importance as well as buying properties that are high in demand (Kempinski, 2014c). Price: The pricing strategy of the hotel chain is premium. The pricing varies according to customer types. For instance, different rates are established for individual guests, business guests and vacation seekers. Group rate is implemented for business or leisure groups of more than 10. A convention rate is fixed for bigger occasions such as, seminars, office parties and outings as well as other personal functions such as, weddings, birthdays and anniversaries. The pricing of the hotels is usually determined on the basis of their average occupancy rates. Place: Kempinski is following a global expansion strategy. The brand has already established itself in 30 different countries across the globe with 75 different hotels, resorts and residences. Majority of these destinations are hot spots and high in demand, making hotels popular and preferred among locals as well as international tourists. The brand has maximum presence in regions such as, Germany, Austria and Middle East. However, the brand is fast expanding into emerging markets such as, Istanbul, in the recent times. Currently, Kempinski’s hot destination for expansion is China, where it is aggressively launching different hotel ranges (Kempinski, 2014c). Promotions: The hotel brand implements a comprehensive mix of traditional and modern channels to communicate with its customers. For instance, the group has been launching unique television ads for communicating the brand’s values. Kempinski also engages customers through direct marketing channels such as, personalized emails and online feedback forms after stay, offering unique packages based on customer priorities and online promotion though various social media sites like, Facebook and Twitter (Kempinski, 2014d). 9. Conclusion and recommendations The purpose of this report was to study the marketing strategy of Kempinski and suggest strategic recommendations for sustainable future. PEST analysis indicated that the European market has grown mature as well as extremely volatile. The hotel chain should start opting for developing and emerging nations such as, China, India, Indonesia and Turkey, where governments are less disruptive as well as more flexible to international hotel operations. SWOT analysis of the brand suggested that Kempinski needs to diversify its customer base to mitigate risks, besides developing the brand across various markets and demographic segments. Apart from hotels, resorts and residential places, the brand can also open its private chain of exclusive theme restaurants and sports bar catering to a wider range of customers. Modern day customers are demanding services and products with multiple offerings with the objective of saving time. Kempinski can become a preferred service provider among its customers by offering a total package solution for their travel requirements. This can include pick and drop facilities, prior booking to exquisite destinations, advanced booking in their preferred restaurants and bars and also providing customized room services. Another recommendation to increase the base of customers as well as footfalls is strategic tie-ups with various firms providing complementary services such as, travel booking, transportation and vehicle leasing. Reference List Bilgihan, A., Okumus, F., Nusair, K.K. and Kwun, D.J., 2011. Information technology applications and competitive advantage in hotel companies. Journal of Hospitality and Tourism Technology, 2(2), pp.139 – 153. Ferrell, O. C., and Hartline, M. D., 2010. Marketing strategy. 5th ed. Connecticut: Cengage Learning. Giannotti, C., Mattarocci, G. and Spinelli, L., 2011. The role of portfolio diversification in the hotel industry: Evidence from the Italian market. European Journal of Business, 6(1), pp.24 – 45. Haberberg, A. and Rieple, A., 2008. Strategic Management. Oxford University Press, New York. Hoovers, 2014. Top Competitors for Kempinski AG. [online] Available at: [Accessed 27 March 2014]. Janet, M., 2002. The international business environment. Bath: Palgrave Macmillan. Kempinski, 2014a. History. [online] Available at: [Accessed 27 March 2014]. Kempinski, 2014b. Our Strategy. [online] Available at: [Accessed 27 March 2014]. Kempinski, 2014c. New Hotels. [online] Available at: [Accessed 27 March 2014]. Kempinski, 2014d. Brand Videos. [online] Available at: Read More