MRKT13014 New Product Development and Branding

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New Product Development and Branding
MRKT13014
Assessment 3
Promotional Plan for the Calile Hotel

Online Student
Unit Coordinator: Jan Lewis

Due Date: 3rd June 2019

Word Count: 1939
Executive Summary
The Calile Hotel is a new luxury hotel that opened in Fortitude Valley at the end of 2018. The hotel has been designed as an urban oasis, nestled amongst the busy Brisbane streets. The Calile’s target market are leisure and business travelers, both international and domestic, who have a higher disposable income, and who seek luxury accommodation and facilities. This report has been developed to develop a promotional marketing plan for the Calile’s first year of entry into the market. To develop an effective marketing plan, the brand’s competitive environment has been analysed using Porter’s Five Forces. The analysis determined that competition in the industry is high, particularly from large hotel chains which have an existing client base and loyalty programs in place.
An Importance-Performance Framework determined that the Calile’s customers place a high importance on service quality and staff professionalism. It was determined that the Calile needs to improve in both areas to improve brand image and attract customers.
Next a BCG matrix showed that the Calile is currently in the Question Mark quadrant and will therefore need to invest heavily into the brand to move into the Star quadrant.
The Calile is currently in the introduction stage of the Product Life Cycle, and therefore marketing efforts need to be aimed at increasing brand awareness to increase customer numbers to enter the growth stage where profits can be earned.
Based on the strategic analysis, three objectives for the marketing plan were determined:
Improve brand image among prospective and existing customers within the next twelve months;
Increase brand awareness among international and domestic consumers (leisure and business) over the next twelve months;
and
Increase interest and intention to purchase among international and domestic travelers within the next twelve months.
Six marketing strategies were formed from these objectives. These included, staff training and internal marketing, dedicated listening & responding to customer complaints/comments, registration with Star Ratings Australia, collaboration with social media influencers, promotion to businesses through email, and the use of social media and the hotel’s website to promote the hotel as a venue for weddings and other events. The projected cost of the marketing plan was approximated at $32,600. The plan will utilize social media, email, and the hotel’s website to improve the hotel’s image, increase awareness and interest in the brand, and ultimately encourage new customers to book with the hotel. The plan will build upon the hotel’s brand strength and increase brand equity.
Table of Contents
Executive Summary 2
1. Introduction 5
2. Background 5
3. Competitive Strategy Analysis 5
3.1 Porter’s Five Forces 5
3.1.1 Threat of New Entrants 6
3.1.2 Threat of Substitutes 6
3.1.3 Bargaining Power of Buyers 6
3.1.4 Bargaining Power of Suppliers 7
3.1.5 Competitive Rivalry 7
3.2 Importance–Performance framework 7
3.3 BCG portfolio matrix 8
3.4 Product Lifecycle Theory 9
4. Promotional Objectives 10
5. Marketing Plan 11
Conclusion 13
Table of Figures
Figure 1 – Importance-Performance Framework 8
Figure 2 – BCG Matrix 9
Figure 3 – Product Life Cycle for the Calile and Ovolo the Valley 9
Table 1 – Marketing Plan for the Calile 11
1. Introduction
The aim of this report is to examine the competitive environment of the Calile Hotel to devise a promotional plan for the brand’s first year of entry into the market. Analysis of the hotel industry will be conducted using Porter’s five forces, which will provide insight into competition within the hotel industry and the operating conditions. An importance-performance analysis will determine the attributes customers place most importance on and will determine how the hotel is performing against each attribute. A BCG analysis will then be performed to determine the level of market-share and market-growth the hotel holds and will also provide insight into the types of marketing strategies that should be considered. Finally, the Product Life Cycle of the Calile will be examined to determine what stage the Calile is in, and what the company should be aiming to achieve during this stage. Following the analyses, a detailed marketing plan will be developed.
2. Background
The Calile Hotel is a new luxury hotel which opened in Fortitude Valley on the eleventh of October 2018, and forms part of the TFE Hotels chain. The hotel has been designed as an urban resort nestled amongst the busy Brisbane streets. The hotel has been designed with luxury in mind, with high quality furnishings and facilities. Every effort has gone into creating a high-end destination for accommodation, business, weddings and events. The Calile’s target audience are high-earning domestic and international consumers (leisure and business) who seek high-quality accommodation and facilities. These consumers are prepared to pay higher prices to take advantage of the benefits, such as the service and quality a high-end hotel provides.
Customer feedback indicates that customers are impressed with the design and styling of the hotel but are generally unimpressed with staff professionalism and customer service provided by the hotel’s employees. The aim of the promotional plan is therefore to improve upon the Calile’s image and increase customer patronage.
3. Competitive Strategy Analysis
To develop a detailed marketing plan for the Calile, analysis into the company’s operating environment must first be conducted.
3.1 Porter’s Five Forces
Porter’s Five Forces framework is a theory which argues that five forces collectively determine the attractiveness and profitability within an industry (Dobbs, 2014). The five forces include: threat of new entrants (barriers to entry), threat of substitutes, bargaining power of suppliers, bargaining power of buyers, and competitive rivalry.
3.1.1 Threat of New Entrants
The threat of new entrants in the hotel industry is low; particularly for the luxury hotel sector. The need for heavy capital investments for purchasing land and for constructing and outfitting new hotels acts as a deterrent for new entrants (Tavitiyaman, Qu & Zhang, 2011). Large hotel chains and existing operators may be a further deterrent to prospective new entrants considering entering the market. Existing operators hold brand awareness in the market, and an existing client base where customer loyalty and loyalty programs may play a part in sustaining a competitive advantage for the existing firms (Cloutman, 2019). Chains such as Hilton Hotels for example, have attractive rewards programs which benefit members with exclusive offers and promotions, as well as earning points for dollars spent which can be redeemed for rewards (Hilton Hotels, n.d).
3.1.2 Threat of Substitutes
The threat of substitutes in the luxury hotel industry is low. Airbnb is a substitution for typical hotel accommodation, for price-conscious consumers. However, for consumers wanting high-end accommodation for business or leisure stays, Airbnb may not offer what a hotel can in terms of facilities, and therefore these consumer groups are less likely to make the substitution (Zervas, Proserpio & Byers, 2017).
3.1.3 Bargaining Power of Buyers
The power of buyers in an industry is determined by the concentration and size of the buyer, the opportunities and costs for buyers when switching, the importance of the product to the buyer, and the degree of differentiation of products in the market (Thompson, Scott & Martin, 2017).
Customers have a high bargaining power in the hotel industry. The growing number of hotels within close proximity to each other enables easy switching for dissatisfied customers. Over the last year the number of rooms available has risen and occupancy figures have fallen. It was reported that during 2018, the growing supply of rooms was greater than demand across Australia which resulted in overall occupancies falling by two-percent (Tourism Australia, n.d). This growing number of rooms provides customers with greater power, with hotels having to compete on price and other factors, such as differentiation, to attract customers.
3.1.4 Bargaining Power of Suppliers
Supplier power in relation to suppliers of materials, guest amenities, and food products is low. This is due to the many suppliers available in the market. In terms of employees who supply their high-quality skills and abilities, their power in this industry is high. Skilled and professional employees are vital to the hotel industry. To provide a high-quality service offering, hotels need highly skilled employees. The service provided by staff determines the quality and satisfaction the customer perceives, and ultimately on the decision of whether to return (Chen & Chen, 2014). For owners and operators in the industry, the cost of hiring and training new employees can be a timely and costly operation. It is therefore crucial for the Calile to retain skilled employees who are highly customer orientated.
3.1.5 Competitive Rivalry
Hotel industry competition is based generally on the similarity of pricing and proximity of hotels to each other (Tavitiyaman et al., 2011). The competitive rivalry in this industry is high. Particularly in capital cities and high tourist areas where hotels are located in close proximity to one another (Cloutman, 2019). Marketing strategies for the Calile should use differentiation to set the hotel apart from the competition.
3.2 Importance–Performance framework
The importance-performance framework (IPF) is a tool for analysing the importance customers place on a company’s products and services and measuring this importance against the company’s performance in these areas as perceived by the customers (Lai & Hitchcock, 2015). The framework is useful for determining which aspects of the company are performing well, the areas that need improvement, and the areas that the company should not focus on. Each of the attributes is placed in the matrix based on the importance-performance scores. Quadrant one indicates ‘keep up the good work’, Quadrant two; ‘possible overkill’, Quadrant three; ‘low priority’, and Quadrant four; ‘concentrate here’ (Kline, Bulla, Rubright, Green & Harris, 2016).
The Importance-performance analysis has been performed for the Calile based on reviews left by customers on hotel booking websites. The attributes were scored on a five-point rating scale for importance and performance.
Figure 1 – Importance-Performance Framework

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*Source: assumed and prepared for this assessment only
The IPF performed on the Calile indicates that customers place a high importance on hotel and room design, room quality, cleanliness, staff professionalism and service quality, the facilities provided, and the quality and offering of food and drinks.
The analysis indicates that the hotel needs to improve the performance of staff professionalism, service quality, the facilities, and the food and drinks on offer, as all of these attributes are located within quadrant four. As can be seen by their location within quadrant one, the hotel’s design, cleanliness and room satisfaction are all high performers. The hotel needs to therefore maintain this high level of performance. Marketing efforts therefore need to focus on improving the service
3.3 BCG portfolio matrix
The BCG matrix dictates that an organisation’s business units can be classified into four segments, based on market growth and market share in relation to competitors (Genoveva & Siam, 2017). This tool enables the effective allocation of resources by organisations (Madsen, 2017). The four quadrants in the matrix are; Stars, Question Marks, Dogs, and Cash Cows.
Figure 2 – BCG Matrix

*BCG matrix source: assumed and prepared for this assignment only
The Calile is currently located alongside Ovolo in the Question Mark quadrant of the matrix. Based on the luxury hotel industry high growth (Cloutman, 2019), it is presumed for this assessment that the potential for market growth is high for the Calile. However, current market share for the company is low. Ovolo has a higher market share compared to the Calile. This is evidenced from the higher number of customer reviews left for Ovolo (1,375) compared to the Calile (274) (TripAdvisor, n.d). This may be in part due to the Ovolo Group purchasing the Emporium and redeveloping into Ovolo the Valley at the end of 2018. Prior customer awareness of the hotel’s location may have positively impacted on market share for Ovolo. In order to move the Calile into the Star quadrant, which signifies the brand as a market leader, heavy investment into the brand is needed (Wong, et al., 2011).
3.4 Product Lifecycle Theory
The Product Lifecycle (PLC) is the theory that products progress through five stages of development over their lifetime, and further guides organisations to adapt their marketing strategies for each stage (Wong, Radel & Ramsaran-Fowdar, 2011). The five stages of the product life cycle are; product development, introduction, growth, maturity, and decline.
Figure 3 – Product Life Cycle for the Calile and Ovolo the Valley

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*source: assumed and prepared for this assessment only
The Calile and Ovolo the Valley are considered to currently be in the introduction stage of the PLC. The Introduction stage is defined by high cost of product introduction, and slow sales growth (Armstrong, Adam, Denize & Kotler, 2014). The high costs of construction and development of the hotels, and the short time period they have been in operation gives reason to believe that profits are not yet being realized and therefore they have not yet entered the growth stage of the PLC. The aim of a product in the Introduction stage of the PLC should be to create awareness among target markets and encourage consumers to trial the product (Armstrong et al., 2014). Therefore, the Calile will need to implement marketing strategies which increase brand awareness and attract new customers to increase sales and enter the growth stage where profits can be gained.
4. Promotional Objectives
Based on the strategic analysis the following marketing objectives have been developed:
Improve brand image among prospective and existing customers within the next twelve months;
Increase brand awareness among international and domestic consumers (leisure and business) over the next twelve months;
and
Increase interest and intention to purchase among international and domestic travelers within the next twelve months.
5. Marketing Plan
Six marketing strategies have been developed to support the goals of the promotional plan, based on the devised objectives. The marketing strategies have been developed to improve the company’s image and reach within domestic and international markets. According to Keller (2013), increased promotion of a brand increases familiarity with the brand which results in greater brand awareness. Another important consideration in developing the marketing plan, is the consistency of the message. It is important that all marketing efforts for the Calile project a consistent message, as this will increase the brand’s strength (Delgado-Ballester, Navarro & Sicilia, 2012). The budget for the marketing plan has been approximated at $32,600. This is based on assumptions made from sources used for this assessment only.
Table 1 – Marketing Plan for the Calile
Marketing Strategy
Objective
Target Market
Media
Notes
Budget
People Strategy:
* Staff Training
* Internal Marketing
OBJ 1
Employees
-In-house training
– Email – Company Newsletter – Digital Signage in staff areas
– Implement training to improve professionalism and service quality employees. The service provided by employees directly affects the hotel’s image, which would be improved with staff training1. – Internal marketing will enable employees to understand, internalize and identify with the hotel’s values and improve upon commitment to hotel’s goals2. Staff training, and internal marketing will improve staff professionalism and service quality, leading to an improved brand image for the Calile and differentiate the hotel from the competition on the basis of service quality.
$10,000
Promotion Strategy: * Assign team member(s) to respond to customer comments & complaints
OBJ 1
Existing and Prospective Customers
– Facebook – Hotel Booking Websites
– Form a team responsible for responding to customer comments & complaints on Facebook and booking websites. Customers share opinions and criticisms on internet sites which other consumers use for forming opinions. Customer reviews on third party websites are trusted by consumers when deciding on hotels3. Responses are currently non-existent on Facebook. Personalised responses that work on resolving issues in a timely manner will improve brand image4
N/A
Physical Evidence Strategy:
* Register with Australian Tourism Accreditation and Star Ratings Australia
OBJ 2
Leisure and business travelers, both domestic and international, who seek high-end accommodation
The Calile Website, 3rd party booking websites, Star Ratings Australia website
– Register for star rating accreditation to improve visibility with consumers looking for luxury accommodation. – Star ratings are highly trusted by consumers and used in over 70 countries, symbolizing quality accommodation standards5.
$3,000
*star ratings fee = $395/yr And maximum tourism accreditation fee of $1990/yr
Promotion Strategy:
* Collaboration with social media luxury travel influencer/blogger consistent with brand image – Athousandwords, Pierre Schuester, or jetsetchristina
OBJ 2&3
International and domestic leisure travelers
Instagram
– Contact blogger/social media luxury travel influencer to collaborate with. – Promote hotel with images from the hotel, fashion stores, restaurant, pool, and wellness spa. – Influencers have access to millions of consumers (globally), and have the power to alter consumer behaviour, as consumers are more likely to trust influencer recommendations over recommendations of organisations6. – Athousandwords – 140K followers, Pierre Schuester – 66.5K followers, jetsetchristina – 82.7K followers.
$10,000
*based on $2000 per post x 5 posts, for influencer with 100 – 250k followers7
Promotion Strategy:
* promote hotel’s facilities to businesses nationally
OBJ 2&3
Domestic business travelers
Email – monthly
– Create a digital brochure to be sent to businesses throughout Australia, highlighting why the Calile is perfect for their next event, meeting, or accommodation purposes. – Include promotional offer such as free upgrades, catering or late check-out/early check-in
$3600
*$300 per month8
Promotion Strategy:
* share imagery of weddings at the Calile to the company’s website and social media channels to promote the venue for ceremonies and receptions.
OBJ 2&3
Prospective customers
Website, Facebook, Instagram
– Retrieve photos from couples married at the Calile to display with comments on the website. – Share these images to Facebook and Instagram with relevant hashtags; #brisbanewedding, #Calilewedding, #celebration, #weddingday, etc. to reach the target market. – encourage couples to share posts from their special day on the Calile’s Instagram and Facebook pages, or to tag the Calile in . – consumers look to a variety of sources when selecting venues and place a high trust in consumer-generated content9.
N/A
Table created for the purposes of this assessment with information from the following sources: Chen & Chen, 2014; 2Tsai & Wu, 2011;3Casado-Diaz, Perez-Naranjo & Sellers-Rubio, 2017; 4Stevens, Spaid, Breazeale & Esmark Jones, 2018; 5Star Ratings Australia (n.d); 6Konstantopoulou, 2019; 7Carbone, 2019; 8Mailchimp (n.d); 9Casado-Diaz, et. al (2017);
Conclusion
This report has examined a new luxury hotel in Fortitude Valley; the Calile Hotel. The report has examined the hotel’s competitive environment to develop a promotional plan for the brand’s first year of entry in the market. Porter’s Five Forces, the Importance-Performance Framework, the BCG Matrix, and the Product Life Cycle were all analysed to determine how the hotel is performing and to determine the objectives for the brand’s promotional plan. Based on the analyses it was determined the promotional plan should work on improving the brand’s image and increase brand awareness and among international and domestic markets, while also increasing interest and encouraging intention to purchase. A marketing plan using consistent marketing strategies was then developed for the Calile, which will work to achieve these objectives.
References
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Carbone, L. (2019) This is How Much Instagram Influencers Really Cost. Retrieved from: https://later.com/blog/instagram-influencers-costs/
Casado-Diaz, A., Perez-Naranjo, L. & Sellers-Rubio, R. (2017) Aggregate consumer ratings and booking intention: the role of brand image. Service Business, 11(3), 543-562, doi:10.1007/s11628-016-0310-0
Chen, W.J. & Chen, M.L. (2014) Factors affecting the hotel’s service quality: Relationship marketing and corporate image. Journal of Hospitality Marketing & Management, 23(1), 77-96, doi:10.1080/19368623.2013.766581
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Keller, K.L. (2013) Strategic Brand Management: Building, Measuring, and Managing Brand Equity (4th ed.) Harlow, UK: Pearson Education
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Mailchimp (n.d) retrieved from: https://mailchimp.com/pricing
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Star Ratings Australia (n.d) retrieved from: https://www.starratings.com.au
Stevens, J., Spaid, B., Breazeale, M. & Esmark Jones, C. (2018) Timeliness, transparency, and trust: a framework for managing online customer complaints. Business Horizons, 61(3), 375-384, doi:10.1016/j.bushor.2018.01.007
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Thompson, J., Scott, J.M. & Martin, F. (2017) Strategic Management: Awareness and Change (8th ed.) Hampshire, UK: Cengage Learning.
Tourism Australia (n.d) Hotel Industry Trends in Australia, retrieved from: www.tourisminvestment.com.au/en/research-insights/hotel-performance.html
Tsai, Y. & Wu, S.W. (2011) Using internal marketing to improve organizational commitment and service quality. Journal of Advanced Nursing, 67(2), 2593-2604, doi:10.1111/j.1365-2648.2011.0596.x
Wong, H.Y., Radel, K. & Ramsaran-Fowdar, R. (2011) Building a Marketing Plan: A Complete Guide. New York, NY: Business Expert Press.
Zervas, G., Proserpio, D. & Byers, J. (2017) The rise of the sharing economy: estimating the impact of Airbnb on the hotel industry. Journal of Marketing Research, 54(5), 687-705. doi:10.1509/jmr.15.0204
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