The Relationship Marketing Issues of the Marriott - Essay Example

Analysis of the Relationship Marketing Issues of the Marriott International Introduction This paper is a study of the relationship management issues of the Marriott International. This company is currently using the internet as a marketing tool. It is noted from the Crain's Chicago Business (1994) that the growth rate of the Web is estimated at about 50% per month. Likewise, it was found out that the number of sites are doubling every fifty three days. The Network Wizards conducted the Internet Domain Surveys. Results showed that business investment is moving unabated onto the Internet. Around the world, a projected sixty per cent of the large companies and thirty per cent of the medium-size companies will also use the Internet for marketing and business purposes by the year (Crain's Chicago Business, 1994). These companies will quickly set up computer sites to conduct their business. This will be done also by the companies in the hotel industry. Many hotel companies have established themselves on the Web with their own web sites or via a link from a third party such as TravelWeb (Crain's Chicago Business, 1994). This study shows evidences of the adoption of a Relationship Marketing (RM) model as a strategy for the development of hotel Web sites of the Marriott International and the use of new technologies to determine the extent of the use of Marriott International of multimedia in their hotel Web sites and to explore the possible impacts of Intelligent Agents and the WWW on hotel marketing. The development and strategic exploitation of the Internet has transformed the basis of marketing. Using evidence from library and internet researches, this study will illustrate the way relationships are being created and managed within the hotel industry by its use of the Web as a marketing tool. Several writers and researchers have collected evidences on the way hotels build and create relationships with their Web presence delivering multi-media information as well as channel and interactive means of communication. In addition, strategic framework is offered as the means to describe the mechanism and orientation of Web based marketing by hotels. The emergence of agent technology will fundamentally change the interface between the customer and the hotel Web site. Currently, intelligent agents are the focus of intense interest in the field of artificial intelligence and are described as the "new revolution in software", according to Guilfoyle and Warner (1994). Hotels will need to be aware of agent technology and how agents can be used to promote hotel products in the global electronic market. Objectives of the Study • To critically evaluate the current position of the firm's relationship marketing strategy in relation to their marketing environment and to be able to apply relationship marketing theory (tools and techniques) towards developing and formulating an in-depth analysis of situations that will generate effective competitive advantages for the firm through the utilization of e-marketing tools (Knowledge, Understanding and Analysis). • To apply a disciplined approach to the analysis of relationship marketing problems and propose effective solutions in terms of appropriate e-marketing strategy development (Problem Solving and Application). • To assess a range of contemporary developments in relationship marketing and apply e-marketing ideas and e-tools in a real life circumstances (Analysis and Application). • To effectively develop logical recommendations to resolve relationship marketing problems by utilising suitable innovative e-marketing tools to manage and build customer relationships. • To exercise Harvard System to cite and reference academic sources. The Company Profile of the Marriott International Marriott International, Inc. is an enterprise is in the service sectors under Hospitality, Hotels, Motels and Tourism Industries. The official address of the Marriott International is at 10400 Fernwood Road, Bethesda, Maryland, MD 20817 United States of America with telephone number 1-301-3803000, fax number 1-301-3803967, E-mail: investorrelations@marriott.com, Web site http://marriott.com/default.mi. Its current workforce is 133,000 as of March 25, 2005, headed by J.W. Marriott, Jr. or popularly known as “Bill”, as the Chairman of the Board and Chief Executive Officer. This enterprise is the leading lodging company with more than 2,600 lodging properties in the United States and sixty four other countries and territories. Marriott International is ranked as the lodging industry's most admired company and one of the best places to work for according to the Fortune Magazine. Marriott International occupancy rates worldwide averaged about seventy five per cent in 2004. Based from Guilfoyle and Warner (1994), the Marriott International was established in the year 1993 when the Marriott Corporation was split into two companies. The other company was named Host Marriott Corporation. It was in the year 1995 that Marriott International purchased forty nine per cent interests in the Ritz-Carlton. By the year 1998, Marriott International had already purchased an additional fifty per cent interest in the Ritz-Carlton. Thus, giving them an almost a hundred per cent ownership (Guilfoyle and Warner, 1994). In the year 2002, This corporation starts a large restructuring by spinning off the Senior Living Services Communities and the Marriott Distribution Services. Their aim in these major changes which was completed in 2003 is to focus on hotel operation and management. It was on September 15, 2004 that the Ramada International Hotels & Resorts was sold to Cendant (Guilfoyle and Warner, 1994). At present, the Marriott International’s operations are comprised of full-service lodging, select-service lodging, extended-stay lodging, timeshare and synthetic fuel. The Marriott International operates and continuously develops franchises hotels and corporate housing properties under its thirteen different brand names. This corporation also operates, markets and develops Marriott International timeshare properties under four separate brand names ((Guilfoyle and Warner, 1994). On the other hand, its synthetic fuel operation consists of interest in four coal-based synthetic fuel production facilities. For the fiscal year ended 30 December 2005, The company’s revenues rose 14% to $11.55B. Net income from continuous operations rose 12% to $668M. Marriott Hotels Integrates its Offline and Online Media for its Marketing Initiatives All of the Marriott International’s offline campaigns relate to one of their sites. According to Hayward (2005), the application of automation to hotel marketing play a key role in the success of a hotel company since there is very little for hoteliers to lose and much to gain by taking a hard, analytical look at how they market their properties on the Web. "Five years ago, nobody recognized that it was so important," says Felix Laboy, president of E-site marketing, a company specializing in search engine optimization (Hayward, 2004). "People would look at me like I was strange. In the last year, interest has sky rocketed" (Hayward, 2005). It is good that the Marriott International is now using online research tools to evaluate their brand strength and their advertising campaigns in key markets (Hayward, 2004). This has resulted to easy evaluation of the promotional campaigns of the Marriott International throughout the years (Anfuso, 2005). According to Anfuso (2005), the Mariott International found that what invariably makes the greatest inroads and generates the greatest results in the marketing aspect of their business is integrated strategic partnering with companies that have similar target demonstrations but offer a vastly different product, preferably a tangible, offline product. Alliances to these companies offer them a different consumer base and add incremental audience to the combined integrated effort (Anfuso, 2005). According to Anfuso, (2005), online advertising has shifted this discipline forward significantly based on its ability to pinpoint previously elusive success metrics. In the past, marketers could truthfully say, “This is marketing… you can never fully measure or appreciate its impact." The danger nowadays, however, is that traditional marketers still say that, and, as a consequence, are often pushed into online marketing by senior management to chase these touted success metrics. My concern is that this can easily go too far. I believe it is possible to push too much marketing into online channels (Anfuso, 2005). There are fewer than a handful of companies executing strategic search solutions effectively. Most of these agencies out there are still reacting to client demands to place media and earn a commission (Anfuso, 2005). Promotions The Marriott International need to be able to service their customers consistently, regardless of which channel the customers use to reach Marriot International, Inc." The company is focused on leveraging e-Business systems to drive customer service, profitability and growth. This is according to Mike Dalton, Senior VP of Marriott Lodging Systems. These in-house promotion strategies used to increase sales are proven effective for many years as shown by Marriott International positive performance since the introduction of these strategies (Palmer, 2000). By installing eCRM applications, Marriott was able to offer several new services that enhanced its hospitality services. The company's website, www.marriott.com became one of the most frequently visited sites in the hospitality industry, giving clients access to the services offered by the entire Marriott chain of hotels and resorts. All these initiatives boosted the company's ability to serve its clients, and also contributed to its own strong financial performance. For the financial year ending 2001-02, the company reported revenues of $84.41 billion and a net profit of $2.7 due to this transition (Marriott's Customer - Focused E-Business Strategy, 2004). Use of Appropriate Terminology that will Indicate a Thorough Understanding of Relationship Marketing and E-Marketing Concepts e-mail : These are the documents and messages that are transmitted between users over a communication network (IBM Globalization – Terminology, 2006). e-mail activity : This is a method of delivering merchandising and marketing content to customers. E-mail activities deliver customized e-mail messages, based on JSP templates, which can include advertisements, suggestive selling initiatives, and promotions, among other merchandising and marketing content (IBM Globalization – Terminology, 2006). e-Marketing Spot: In WebSphere Commerce, data on a Web page that typically results from a marketing activity such as a campaign (IBM Globalization – Terminology, 2006). CRM : This is used to describe either the software or the whole business strategy (or lack of one) oriented on customer needs (Numotion – CRM (Customer Relationship Management, 2006). The Extent of the Use of the Internet of the Marriott International Marriott International came up with advertising and promotional strategies that are used electronically or on the Internet. In 2004, Marriott launched an advertising campaign that is inspired by real life travel experiences to showcase the company’s unique service culture. The campaign called “It’s the Marriott Way” features a series of stories that reflect Marriott’s strong relationship with its guests and highlights the many enhancements offered across the company’s hotel brands. “Our campaign speaks to people not as consumers but as human beings,” said Deborah Fell, Marriott’s senior vice president of marketing strategy and integration, “we are shifting our message toward recognizing our incredible employees, showcasing our brands and telling people what Marriott is all about” (Marriott Advertising Campaign, 2004). With reference to the article Deploying Customer-Centric Systems is Your Best Growth Strategy in the New Economy, but the Application Integration Challenges are Huge (2002), it was reflected there that Marriott International, designing Web pages is rather simple as compared to implementing a customer-centric Web portal. Hence, the paper stressed that the challenge of providing the right information at the right time to satisfy each customer’s unique needs demands dynamic content tailored to their preferences. The author stressed that to provide this information and enhance relationship with customers, the portal must integrate data from multiple applications, whether they’re internal or external to the company (Deploying Customer-Centric Systems is Your Best Growth Strategy in the New Economy, but the Application Integration Challenges are Huge (2002), Marriott International is the Top Five Hotel with the Highest Number of Features Table 1. List of Hotels with the Highest Number of Features ( Top 10% of the Hotel Web Sites).    Hotel Chain No. of Web Features Sheraton Hotels & Resorts 27 Hilton Hotels & Resorts 25 Best Western International 22 Hyatt Hotels & Resorts 21 Marriott International 20 Inter-Continental Hotels 20 Destination Hotels & Resorts 20 Westin Hotels & Resorts 18 Days Inn of America 17 Rosewood Hotels & Resorts 17 Holiday Inn Worldwide 16 Rennaissance Hotels & Resorts 16 Radian 15 Shangri-La Hotels & Resorts 14 Source: Gilbert et al., 2008. A Solution to Hotel Communication Limitations are Web Features Hensdill (1998) describes the Web as "a perfect medium for selling travel". According to HOTEL's 1998 Worldwide Technology Survey, 81% of hoteliers worldwide were thought to be capable to accept reservations over the Web in 1999. There is now widespread acceptance of the use of the Web for electronic commerce. The Web's potential as a low-cost distribution channel is having a profound effect on both business and consumers. There are a number of reasons for this. The costs for establishing and hosting a Web site vary greatly depending upon the scope of the project, but can be relatively low. The Web offers the possibility of high-speed global information transfer, high levels of interaction and links to computerised reservation and database systems, irrespective of geography, time zone, or computer system. There are therefore benefits in extending the firm's marketing reach to the global marketplace; supplanting traditional distribution channels, and allowing potential consumers browsing time by use of Web technology (Gilbert and Powell-Perry, 2000). The above features of the Web are a possibility for all hoteliers and therefore the Web has the ability to provide equality of access and strategy for all. In addition for larger companies the Web offers a competitive alternative to more traditional computerised distribution channels, such as the Global Distribution Systems. The hotel industry is information-intensive and the Internet is, first and foremost, an information resource. Virtual hotel tours can now be found on a number of hotels Web sites (e.g. Golden Tulip Hotels, Jarvis Hotels, Marriott International and Wingate Inns) and views from selected rooms could be simulated (Gilbert and Powell-Perry, 2000). Success of Marriott International in the e-Marketing is in the System Metrics drive Marriott. When implementing the PeopleSoft enterprise service automation module for project tracking and time reporting within Information Technology, for example, programmers developed a tool so that project and productivity metrics are automatically computed after time is entered (Overby, 2003). Another rule for metrics is to make sure that the right people get the right data in a form that's meaningful to them. For example, five years ago the critical metric for Marriott.com was uptime. Today, it's how much business the website books. Last year, metrics fueled the IT department's decision to invest in an upgrade to the site that would make it easier to reserve rooms. Today, more than 75 percent of rooms booked online come through Marriott.com, saving the company $12 million annually (Overby, 2003). Keeping its eye on the numbers lets Marriott revisit business cases for IT projects each quarter. "The project itself may not change that much, but something external may happen—something like SARS, something from the competition," Melnick explains. "Just because you start a project and it's on track doesn't mean you want to keep the same pace. There may be something that comes up that's even better" (Overby, 2003). Recommendation As emphasized in the article Deploying Customer-Centric Systems is Your Best Growth Strategy in the New Economy, but the Application Integration Challenges are Huge (2002), The use of the World Wide Web as an interactive communication medium is still in its initial stage. Currently, the large hotel companies have begun to explore its potential to develop long-term relationships with customers. This means competitive advantage to be developed by the larger hospitality organisations. The Web still has a long way to go in terms of its development as a Relationship Management tool, which is very much dependent upon customers' demands, hotel companies' willingness to let their web sites assume a bigger marketing role, and the available technology. However, there seems to be widespread confidence within the hotel industry of the future of the web as a marketing mechanism. Hotel companies should adopt Relationship Management as a strategy guiding the development of their web sites (Gilbert et al., 2005). Both Relationship Management and the World Wide Web combined together present a powerful competitive advantage for hotel companies at a time when there is increasing competition over a reduced customer base. As such, no hotel company can afford to ignore the full potential of the Web as a strategic mechanism to facilitate the practice of Relationship Management. This means that the application of the Web as a Relationship Management tool is the next logical step forward for the whole of the hotel industry (Gilbert et al., 2005). Using the evidence gathered from many of these sites this study reveals the current strengths and weaknesses of the use of the internet of Marriott International as a relationship marketing tool by this hotel company. References Anfuso, Dawn. Marriott International's John Padwick. iMedia Connection: Connecting the Marketing Community. Interview with John Padwick, October 20, 2005. 2006 iMedia Communications, Inc. Crain's Chicago Business. EU Information Technology: Not Yet on the Internet?. Business Europe, April 3, 1994. Deploying Customer-Centric Systems is Your Best Growth Strategy in the New Economy, but the Application Integration Challenges are Huge. Center of the Universe, November 1, 2002. http://www.scala.bmolsson.com/display_scala_page_articles.asp?artId=21. Gilbert, David C. and Powell - Perry, Jan A. A Current Overview of Web Based Marketing within the Hotel Industry Relationship Marketing Strategy for Hotel Group Web Sites. Ideas & Trends: Hotel Online. Paper resented during the Fourth International Conference on "Tourism in Southeast Asia & Indo-China: Development, Marketing and Sustainability", June 24-26, 2000. Gilbert, David C., Powell - Perry, Jan A. and Widijoso, S. A Study of the Hotel Industry's Application of the Internet as a Relationship Marketing Tool. Third International Conference. “Tourism and Hotel Industry in Indo-China & Southeast Asia: Development, Marketing, and Sustainability”, June 1998. Guilfoyle, C. and Warner, E., (1994). Intelligent Agents: The New Revolution in Software, Ovum Ltd. Hayward, Philip. Send Out the Search Party. Lodging, July 2004, 41. Hayward, Philip. 2005. Send Out the Search Party: Mastering the Art and Science of Search Engine Optimization. E-Site Marketing in the News. http://www.esitemarketing.com/news/news.php?news_id=24. Hensdill, C., (1998). The new Breed of CRSs'. Hotel, Vol.32 No.7, pp.105-108 IBM Globalization – Terminology. 2006. Marriott Hires Euro RSCG for UK e-Marketing Push. Hotel Marketing.com, June 02, 2006. News Article. Numotion – (CRM) Customer Relationship Management. 2006. Overby, Stephanie. The Devils in the Details — Success is in the System: The Spirit to Serve. From “The Keys to Marriott's Success”. Portfolio Management Forum. CIO Magazine, August 15, 2003. CIO.com.: The Resource for Information Executives. CXO Media, Inc. Palmer, A., McMahon-Beattie, U. and Beggs, R., (2000). A structural analysis of hotel sector loyalty programmes. Appendices Appendix 1. Company Logo and Basic Information on the Marriott International, Inc. Type Public Founded May 15, 1927 in Washington D.C. Location United States of America Key people J. Willard Marriott, the Founder J.W. Marriott, Jr. (nicknamed “Bill”) chairman and CEO Industry Hospitality, Hotels, Tourism Products Hotels, Resorts Revenue $15.14 billion USD (as of 2004) Employees 133,000 (as of March 25, 2005) Website www.marriott.com Appendix 2 Estimate Revenues for 2005 to 2006. Fourth Quarter 2005 Full Year 2005 Full Year 2006 Total fee revenue  Approx. $320     Approx. $1,020     $1,165 million to $1,185 million Owned, leased, corporate housing and other, net       $55 million to $60 million       $158 million to $163 million         $150 million to $155 million Timeshare interval sales and services, net of direct expenses $60 million to $65 million $263 million to $268 million         Approx. $265 million General, administrative & other expense(1)   Approx. $185 million           Approx. $648 million            $600 million to $610 million                   Lodging operating      income(1)         $250 million to $260 million      $793 million to $803 million        $970 million to $1,005 million      Gains(2) (excluding      synthetic fuel)          Approx. $55 million      Approx. $130 million      Approx. $100 million Net interest expense(3)          Approx. $25 million            Approx. $40 million                               Approx. $80 million   Equity in earnings/     (losses)           Approx. $5 million            Approx. $25 million                                   Approx. $25 million  Earnings per      share from synthetic fuel       Approx. $0.12     Approx. $0.51       No guidance Earnings per share(4)      $0.95 to $0.98    $3.09 to $3.12       No guidance Earnings per share excluding    synfuel(4) $0.83 to $0.86    $2.58 to $2.61      $3.00 to $3.10   (1) Full year 2005 excludes the 2005 second quarter $94 million pre-tax ($0.26 per share) one-time charge associated with the CTF transaction. (2) Includes timeshare mortgage note sale gains. (3) Includes interest expense and provision for loan losses, net of interest income (full year 2005 excludes the $17 million one-time impairment charge related to an investment in a Delta Air Lines leveraged aircraft lease). (4) From continuing operations. Full year 2005 excludes $17 million ($0.05 per share) one- time impairment charge for the leveraged lease and $94 million ($0.26 per share) one-time charge associated with the CTF transaction. 2006 excludes charge associated with the new timeshare accounting rules and $0.13 per share charge associated with the adoption of FAS123R. Read More