Select two well-known companies from the same industry. Evaluate each company’s target market characteristics in terms of purchasing patterns, demographics, psychographics, and buying sensitivities. Determine the key challenges that each company must face as it attempts to differentiate when competition is stiff, profits are small, and funding is scarce.
Marriott, more specifically their luxury line, The Ritz-Carlton, and Hilton are the two company’s target market characteristics that will be compared. The Ritz-Carlton has defined their experience as “access to the extraordinary for memories of a lifetime” and they live up to every aspect. Their target market purchasing patterns are directed toward travelers and corporate meetings. They research their clients and have a proven system that is able to track client habits and predict their return.
Their demographics are more focused on a specific lifestyle so income for the traveler would be a key factor or corporations with large budgets for entertainment. They are moving toward a more family friendly experience for their travelers so the age range would be wide.
The psychographics of their target market is again focused on a lifestyle so it brings with it clients that have specific attitudes and desires (such as being pampered).
The Ritz-Carlton has successful created a system that provides a consistent fantastic experience for their clients to keep them coming back. How can you put a price on that? Like Master Card used to say, “Priceless”. They dominant in overall guest satisfaction ratings. And since their target market is a lifestyle with memories that last a lifetime, how do you put a price limit on that? But they monitor their market and track demand. As demand increases so do the room rates. They measure profitability by RevPAR (revenue per available room (PAR)). Per their 2013 Financial Statements, The luxury Ritz-Carlton is almost double that of the worldwide hotel RevPar.
Hilton targets middle class travelers and business travelers’ worldwide. The business focus from their Financial Statement is that “the best people provide the best guest experiences.” The have 40 Million members in the Hilton HHonors which accounts for 50% of their bookings.
Their demographics are focused on the middle class and the repetitive business travelers. Their psychographics is also focused on the business traveler so they focus on brand name recognition, locations, and room rates. Their clients want to feel like they got the best price for the best room. They also measure profitability by RevPAR. They are slightly under The Ritz-Carlton RevPAR.
Hilton experiences seasonal revenue with the 1st quarter typically being the lowest in Sales as well as cyclical based on the economy. Both The Ritz-Carlton and Hilton share occupancy rates above 70%.
Both companies face challenges with defending their Brands, maintaining very high customer satisfaction ratings, and keeping up with customer preference changes.
Nixon, N.W., & Rieple, A. (2010). Luxury Redesigned: How the Ritz-Carlton Uses Experiential Service Design to Position Abundance in Times of Scarcity. Design Management Journal, 5 (1), 40-49.
Unknown. (2010). Winning Brands by Guest Preference. Black Book – Lodging: The Power of Brands, 41-54.
Identify two different niche markets: one of a product-based niche, and the other of a service-based niche. Evaluate and compare how each niche distinguishes itself from its competitors in terms of market size, opportunity for advertisement, market need, and ability to sustain the business long term.
Trader Joe is a good example of a product-based niche. They target people who travel, are well educated and want quality food at low prices. Instead of carrying many brands of the same product, they carry only the one they think is best and label most of their items under their brand. This allows them to keep manageable market size by opening small stores, which their clients prefer. They open stores in areas they believe serve “worldly and smart” people fitting their market need. When a Trader Joe's opens, everyone in that neighborhood knows by word of mouth. They monitor their clients demographics down to the food magazine subscriptions to stay in touch with their base and continue which in turn will help them sustain a long term business.
Roto-Rooter, owned by Chemed Corp, is an example of a service-based niche. They offer residential and commercial plumbing and drain cleaning to 90% of the U.S. They advertise via telephone directory listings. They continue to penetrate and increase their market size through acquisitions in selected states, one acquisition at a time. They expect to continue to grow slowly (about 2%) due to an increase in the number of jobs they perform and the price they charge per their 2013 Annual Report.