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Pricing Strategy for Intercontinental Hotels
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Table of Contents Pricing Strategy for Intercontinental Hotels .............................................................................. 1 1. Introduction ............................................................................................................................ 1 1.1 Background ...................................................................................................................... 1 1.2 Literature Review............................................................................................................. 2 1.3 Aims ................................................................................................................................ 3 1.4 Objective .......................................................................................................................... 3 2. Methodology .......................................................................................................................... 4 2.1Research Tools .................................................................................................................. 4 2.2 Bias .................................................................................................................................. 4 2.3Ethical Issues .................................................................................................................... 4 2.4 Validity and Reliability .................................................................................................... 5 2.5 Limitations ....................................................................................................................... 5 3. Data Analysis ......................................................................................................................... 5 3.1 Management ..................................................................................................................... 5 3.2 Customers ........................................................................................................................ 6 .................................................................................................................................................... 7 4. Discussion .............................................................................................................................. 8 5. Time scale .............................................................................................................................. 8 Conclusion ................................................................................................................................. 9 REFERENCES ........................................................................................................................ 11 Appendices ............................................................................................................................... 13 Appendix 1 ........................................................................................................................... 13 Best Assignment Service provider in Australia. Email us:help@instantassignmenthelp.com.au
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PRICING STRATEGY FOR INTERCONTINENTAL HOTELS 1. INTRODUCTION In this research report pricing strategy that is adopted by the Intercontinental hotels is identified and discussed in detail. In respect to this, a primary research on firm pricing strategies was conducted under which data is collected from local people and corporate. A pricing strategy is a plan under which firms charge an amount for the service delivered by them to their customers. By formulating and implementing sound pricing strategy hotels will be able to determine different prices by using which it will achieve huge profit, growth in relevant industry. By doing this it will be able to beat its rival firms in relevant industry. Companies prepare pricing strategy in order to achieve their long and short term goals as well as objectives (Spencer, 2010). However, business objectives are achieved in a manner the management appreciates internal and external factors within business unit. Thus, in this research report pricing strategy of the firm will be compared with customers’ opinions which are given in second part of research. Information about customers’ opinion is collected in order to find out opinion of customers on the price for the service that they charged on their customers. In order to better understand pricing strategy it will be good to read the available literature on strategies implemented by competitors at the market place. Review of such kind of literature will help in identifying strategies implemented b the companies at ground level in relevant industry. This will certainly helps in comprehending pricing strategy followed by companies in the industry (Tso and Law, 2005). Hence, by reviewing available literature researcher will get an overview about pricing strategy employed in the industry and factors that affects industry. In this report, employed research methods will be explained in detail. Theoretical literature will be reviewed in order to prepare project report in better way. It is also necessary to highlight the background of research into consideration. 1.1 Background Mentioned topic was selected because there are numerous Intercontinental hotels in many towns. The main objective of research is to understand the pricing strategies of these 1|Page Best Assignment Service provider in Australia. Email us:help@instantassignmenthelp.com.au
Save Upto 50% Discount On Assignment Order hotels which are important element of marketing mix. It is commonly said that companies determined price of their products by considering level of service quality they give to their customers while delivering a service to them (Wang and Chung, 2015). Therefore, it will be necessary to identify the way which companies are using in order to compete with their rival firms on the basis of price.
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The consumer behaviour of the people is very difficult to understand because it keeps on changing with passage of time. Pricing strategy is a weapon that can be used to attract people towards company product. A marketing segment is group of people with some uniform characteristics that a company wants to target for selling its product. According to Jobber (2004), firms must draft messages, set pricing level and direct other strategic efforts for compelling target customers for making purchase of the company product (Steed and Gu, 2005). Due to this reason, the pricing strategy is commonly used for positioning a product. Hence, the main aim of this research is to comprehend the Intercontinental hotel’s efforts in terms of their pricing strategy. Nevertheless, literature review will help in understanding pricing strategies employed by competitors.
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Save Upto 50% Discount On Assignment Order 1.2 Literature Review Many firms in this industry are using multiple plans in order to enhance their customer base. In other words, it can also be said that they are not sticking to single plan. A strategy is a kind of plan which is prepared to achieve objective in pre determined time period (Collins and Parsa, 2006). For research Hilton hotel is taken as intercontinental hotel which is a 5 star hotel and known for charging a premium prices for its products and services. The mission of Hilton hotels is to make available best services money can buy. Due to this reason, Hilton hotels are using premium pricing strategy for selling its service. A price skimming strategy is a tactic in which a company sell its products at high price in order to attract those people that wants excellent quality service (Hung, Shang and Wang, 2010). There are many customers who do not like to use services of hotels that do not promise good quality of service. As a result, under price skimming strategy business executives and wealthy people are targeted for company products and services. Hilton hotel charge premium price for its service and it justified its pricing policy by offering quality services to the customers. In this industry companies must charge price for their services as per industry trends. Hence, if prices are too high then Hilton hotel needs to provide innovative service whose substitute is currently not available to the rival firms. If this is not possible then by doing price discrimination firm can successfully retain its loyal customer base.
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A hotel such as Hilton and Sheraton in comparison to peer firms always focuses on bringing up innovations in their services so as to differentiate their offers and justify their high prices (Enz, 2009). The hospitality industry provides a service that makes their customers feel comfort in their rooms. Therefore, companies operating in this industry must provide quality services at such a level that a customer fined more comfort in hotel then his home. This wills certainly justified premium pricing of services. If the quality is lower, then firm can use differential pricing strategy in order to compete with firms that are offering similar services to attract target customers. If firm does not want to follow this Strategy it can improve its service quality. Normally, lower prices indicate poor service quality (Heo and Lee, 2011). So, hotels must attempt to provide high quality of service to their customers in order to enhance their customer base.
Therefore, premium price reflects good quality of services to the target market . It has been seen that in this industry many companies use pricing strategy for building their special image in the eye of customers (Tsai and Chen, 2011). If prices are reduced to large extent, then original customers nay abstain from taking company service and a new class of customers will be attracted. Similarly, if the firm increases price for its products, a new class of customers will be attracted. Along with hike in price of product firm needs to improve its service quality for rebranding a hotel (Bodea and Ferguson, 2014). The management is responsible to determine pricing strategies with utmost care. Pricing strategy is usually used to position company products especially when target customers are price sensitive. Hence, the main aim of study is to identify efforts made by Intercontinental hotels for position their products by using pricing strategy.
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1.3 Aims It is said that a researcher aim of study must be clear. So, that research directs in specific direction. The objective of this study is given below.
To comprehending the pricing strategies formulated and implemented by the Intercontinental Hotel Group. In order to achieve aim objectives are determined which are directed towards
achievement of pre determined aim. Methodology for research will be selected by considering following objectives (Matzler, Renzl and Rothenberger, 2006). 1.4 Objective
To identify the reasons due to which firms are using specific pricing strategy
To understand the impact of pricing strategy on customers
2. METHODOLOGY In methodology a strategy is followed under which a researcher employs techniques, gathers data and subsequently processes it to get valuable information. For conducting this 5|Page Best Assignment Service provider in Australia. Email us:help@instantassignmenthelp.com.au
Save Upto 50% Discount On Assignment Order research, primary research method was used in order to collect the data from various sorts of respondents. Primary research involves collection of raw data for the first time to support research work. On other hand, secondary data refers to information that is already published and collected from newspaper, journals and magazines (Orfila-Sintes and Mattsson, 2009). In this primary research, questionnaires are used to collect the data from target audienece. Apart from this other techniques that can be used in primary research are interviews, experiments, observations and tests. 2.1Research Tools There are two types of questionnaires for different respondents. These questionnaires containing 11 and 13 questions and these were sent to general public and corporate respondents. Questionnaire that contain 11 questions were given to 40 customers, out of which 30 respondents give response to the received questionnaire. Questionnaire that encompasses 13 questions was sent to a top manager of intercontinental hotel in order to gather data from intellectual people.
Different type questions were available in both
questionnaires in order collect required data. The numbers of samples in the research were consistent with the requirement for a research to be valid (Bodea and Ferguson, 2014). The questionnaires were given by the researcher to the respondents and he gives full guidance to respondents while filling a form. 2.2 Bias People from different geographies were used while taking a response in order to avoid biases in response of respondents. Managers of INTERCONTINENTAL HOTEL provide valuable information through questionnaire. Such kind of information earlier was not available to researcher. Therefore, the researcher could not have been biased as he did not have any information about Intercontinental hotel (Yeoman and McMahon-Beattie, 2010).
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Save Upto 50% Discount On Assignment Order Similarly, for interpreting data graphs are used along with facts. As a result, the possibility of bias or manipulation of data was eliminated. 2.3Ethical Issues The researcher should communicate objectives of research into consideration to respondents. Moreover, the respondents should be delivered deep understanding of questionnaire into consideration. It is again stated that participants are volunteer and their information is kept confidential (Becerra, Santalรณ and Silva, 2013). Ethical issues are duly followed when permission was taken from the management of the Intercontinental hotel. Non compliance with ethical issues may affect validity of research.
This is the sample business plan on Pricing Strategy for Intercontinental Hotels For Complete Assignment Help Call us at:61 879 057 034 2.4 Validity and Reliability Validity and reliability factor of the research outcome is considered for making study reliable. In respect to this, sample is collected and tabulation of results was done in such a manner that reduces or eliminates chances of mistake. In addition, the questions had to be drafted and presented according to requirements of study (Gursoy, Saayman
and
Sotiriadis,
2015).
While
answering
the
questions,
respondents have to consider their feelings about subject matter. So that accurate information is collected from the respondents. 7|Page Best Assignment Service provider in Australia. Email us:help@instantassignmenthelp.com.au
Save Upto 50% Discount On Assignment Order 2.5 Limitations
There main limitation of this research is that in this research only single firm is taken. Due to this reason, in this research data is collected from single manager. It is possible that, the manager of Intercontinental hotel may give inaccurate response than whatever scenario is prevalent on the ground. Company selected desired pricing strategy; the manager can hide details
about
fierce
competition
that
is
playing
decisive
role
in
ascertaining their prices policy. Determined sample size has its own limitations (Jayawardena, et.al, 2013). General people were taken as respondent of research. As a result, their answers are not accurately directed towards perfect answer of question.
3. DATA ANALYSIS The data analysis was divided according to the research categories used comprising of customers and management. 3.1 Management It was identified on discussion with managers of the Intercontinental hotel that said hotel is three stars in nature. Management gives a statement that services they offer is average service given in the hotel industry. The organization’s pricing strategy is considered to be highly convenient in nature. It can be said that the prices charged are comparatively reasonable as per industry standards. The organization has an option to reduce or increases prices as per changing demand (Öüt and Onur Taş, 2012). The major advantages available to the business unit are of its efficient customer care services, location, reasonable prices and reputed brand image. 8|Page Best Assignment Service provider in Australia. Email us:help@instantassignmenthelp.com.au
Save Upto 50% Discount On Assignment Order 3.2 Customers In order to comprehend impact of a pricing strategy, the customers’ responses were taken through distribution of questionnaire. From below image, it was clear that price is a mirror of service quality. Both men and women were agreed on this statement in the survey.
Figure 1: Elements denoted by pricing
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From chart it can be seen that in sample there are about 60% females and 40% males.
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From chart; it can be seen that people does not have any concern about hotels stars status. In other words, it can be said that people agree that most of the hotels provides services as per their star category.
Equally, in figure 2, it was found that majority of women respondents give priority to the hotels that provide services to the 11 | P a g e Best Assignment Service provider in Australia. Email us:help@instantassignmenthelp.com.au
Save Upto 50% Discount On Assignment Order customers at cheaper price. In research it was find out that many males were also interested in taking service of the hotels that provides services at cheaper price. However, majority of males prefer hotels that offer good quality service to the customers. In research many women accept that they consider service quality factor while selecting an option. Table 1: Are you concerned with stars on hotels Are you concerned with stars on a hotel Men Yes
Women 5
7
A r e y o u c o n c e r n e d w it h s t a r s o n a h o t e l ? 8 7 6 5 4 3 2 1 0
Men Wom e n
Y es
No
No
1
2
In research 5 men state that they are concerned about star status of hotels. Only on men said that he does not concern about star status of hotels. In case of women seven are concerned with star status of hotels. Only two respondents are not concerned about star status of hotels. Hence, it can be said that most of the respondents are concerned about star status of hotels. Which hotel is favourite? 12 | P a g e Best Assignment Service provider in Australia. Email us:help@instantassignmenthelp.com.au
Save Upto 50% Discount On Assignment Order Table 2: Which hotel is favourite? Men Women Hilton
2
3
Intercontinental
2
4
Holiday Inn
2
1
W h ic h h o t e l is y o u r fa v o u r it e ? 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0
Me n Wom e n
H ilton
Intercontine nta l
H olida y Inn
In research it has been find out that equal respondents out of total male sample prefer three mentioned hotels. But most of women prefer Hilton and intercontinental hotel followed by 3 and 4 respondents. Only 1 woman prefers to take service of Holiday in. Does hotel adverts make you trust and pay more?
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Table 3: Does hotel adverts make you trust and pay more Men Yes No
Women 4 2
8 1
D oe s h ote l a d v e r ts m a k e y ou tr u s t a n d p a y m or e 9 8 7 6 5 4 3 2 1 0
Me n Wom e n
Y es
No
On analysis of facts it has been seen that majority of males and women trust on advertisement presented by hotels through various channel of communication. Only 2 male and one women does not believed in advertisement given by the hotels through various channel of communication.
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4. DISCUSSION In survey it is find out that Intercontinental hotels set a price in alignment to price set by hotels in relevant industry. If they failed to price their service about prevalent price level in the industry they may lose their grip on market. If hotel price its services equivalent to the price charged by four or five star hotel then its customer base can reduced. This will happen because hotel will not be able to provide quality service which four or five star hotels provide to their customers. If intercontinental hotel reduce its price then customers may think that hotel is providing low quality service to its customers. By reducing price firm can attract large number of customers towards its hotel. By following such kind of approach firm may fail to cover its service offering cost. This in turn results in reducing service quality which impacts level of customer satisfaction. This statement was proved from answers received from respondents in research. In survey it was also find out that customers have perception that pricing indicate quality of service offered by hotel to its customers. Due to this reason Intercontinental hotel is in position to attract those customers that give priority to quality at place of price.
5. TIME SCALE Table 4: List of activities Sr. No.
Activities
List of activities
Weeks
Preceding activities
1
A
Supervisor discussion
1
2
B
Preparation of proposal
1
A
3
C
Submitting the proposal
2
B
Acknowledgement by 4
D
supervisor
1
C
5
E
Literature review
5
D
6
F
Data collection
4
D
7
G
Data analysis
4
E,F 15 | P a g e
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H
Interpreting outcomes
3
G
9
I
Preparation of project report
4
E,G
10
J
Conducting review
2
I
11
K
Finalizing the project
1
J
12
L
Project submission
1
K
Illustration 1: GANTT chart
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Illustration 2: Network diagram Total time taken by the project will be 22 days. Hence, all activities must be performed in sequence shown by network diagram.
CONCLUSION From survey it is clear that Intercontinental hotel is preparing its pricing strategy by considering strategies followed by the rival firms. Thus, for maintaining durability in customers, price differentiation strategy is employed to give stiff competition to rival firms. Intercontinental hotel is a three star hotel and premium pricing of services like five star hotels may wrong for the firm.
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Save Upto 50% Discount On Assignment Order Intercontinental hotel prefer to target those people that are cost conscious and like to consume service that is of average quality. By doing this hotel can enjoy commendable positon in relevant industry. Intercontinental hotel for competing with top-level hotels are required to provide quality service. Along with this, it also needs to advertise its brand name in new way in order to create distinct image in the eyes of customers. In survey from analysis of facts it comes in light that majority of customers give priority to both price and quality while choosing a specific hotel. In research, it has also find out that price gives a message about quality of service given by hotels to their customers. In hotel sector pricing strategy plays a crucial role and also reflects power of competitiveness of an organization. Therefore, firm must align its service pricing with quality.
RECOMMENDATIONS On the basis of entire discussion it is recommended that management must give a due importance to the price factor. Because in research it has been found out that most of the people consider price factor while selecting any hotel. On other hand it is also recommended that hotels must provide service as per their star status. This is because on the basis of star status of hotel people have some expectations regarding service quality from hotels. If hotels will not provide expected level of service quality then negative image of the hotel will be formed among people. Most of people believe on the advertisement givens by the hotels. Hence, hotels must make sure that it is not doing exaggeration in its advertisement. If the same will be done then people will lose confidence on the hotel. Hence, it is strictly recommended that advertisement must hundred percent genuine in nature. Otherwise recognized authorities can take strict action against the firm under trade description act 1968. As per this act any firm must advertise correct features about its product. If any company does not do so then judiciary have a right to take a strict action against then firm in terms of
This is the sample business plan on must make its advertisement 100% genuine. organization is liable to deliver the same Pricing Strategy for The Intercontinental Hotels
penalty. This will also tarnish company image. Hence, it is strictly recommended that a firm
offering as communicated through advertisement. This in turn results in abidance by legal
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regulations and creation of positive brand image. It is therefore recommended that
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REFERENCES
Becerra, M., Santaló, J and Silva, R., 2013. Being better vs. being different: Differentiation, competition, and pricing strategies in the Spanish hotel industry. Tourism Management.
Bodea,T and Ferguson,M., 2014, Segmentation, Revenue Management and Pricing Analytics. Routledge.
Collins, M and Parsa, H. G., 2006. Pricing strategies to maximize revenues in the lodging industry. International Journal of Hospitality Management.
Enz ,C.A., 2009. Hospitality Strategic Management . John Wiley and Sons.
Gursoy,D., Saayman,M and Sotiriadis,M.D., 2015, Collaboration in Tourism Businesses and Destinations. Emerald Group Publishing .
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