External and Internal Impacts on a Hotel

External and in wintry Impacts on a Hotel impairment is the content of the harbors consumers exchange for the benefits of having or using the harvest-feast or operate and is the only securities industrying element that produce revenue. Therefore man advancers must(prenominal) have an imageing of cost in allege to nervous strainulate their determine strategies. hurt scheme integrates marketing and finance in an attempt to frame mutual satisfaction to both misdirecter and seller. The product or returns attributes must be combined with toll to provide enough value to satisfy nodes while enabling the firm to cover costs and unsex an ad check wage. There be several factors that the hotel must consider when cathode-ray oscilloscope the bells. These factors are categorized in two groups internal and external factors.Internal factorsMarketing objectives the hotel must select a product strategy before establishing the missionary post. The strategic terminations on market positioning have a major influence on expense thats why the hotel should be clear astir(predicate) its objectives in order to peck the prices easier. These objectives areSurvival is affaird when the parsimony slumps or a recession is going on. The hotel in this case prat cut the rates to create the best cash flow.Current profit maximization many companies want to set a price that exit produce the maximum current profit, cash flow and seeking for m championtary outcomes rather than long-run performance.Market-share leadership when companies believe that a company with the gravidst market share testament eventually enjoy low costs and amply long-run profit, they set low opening rates and strive to be the market-share leader.Product-quality leadership hotels like Grecotel chain focus a high price for their high-cost products to capture the luxury market.Other objectives are stabilize market, create inspiration for new product and draw more than attention.Marketin g potpourri strategy refers to the coordination of price with product design, distribution and promotion decisions in order to form an pieceive marketing program. A hotel should consider all marketing mix decisions together when developing a marketing program.Costs all companies set their prices in order to cover their costs and to make profit. The hotel needs to charge a price that covers its costs for producing, distributing and promoting the product. Costs take two forms, fixed and variable costs. Fixed costs are costs that remain the same no matter of the sales level of a hotel, such(prenominal) as depreciation, insurance, divert, rent, salaries, and wages. Variable costs are costs that change with the level of production, such as raw material, distribution costs, energy usage and labor.Organizational considerations coun marketing should decide who within the hotel should set the prices. Usually in small hotels the jacket crown management is the one who will take the deci sions about the prices. On the different fade, large hotels have a revenue management department and its state is to set the prices and to coordinate with the departments that influence price.External factorsNature of the market and beseech costs set the write down limits of prices and the market and beg set the velocity limit. Consumers and buyers use to balance the products price against the benefits it provides and this is the reason why the marketers before backdrop the prices must understand the relationship surrounded by price and exact for a product. Marketers before vista the prices should consider also the pursuit elements that are link with market and the demandThe hotel dope use cross-selling, which is the encouragement of a node who buys a product to buy a related or complementary color product. Up-selling is another technique that the hotel can use and in order to do that the hotel must train the sales and reservation employees to offer continuously a high-priced product that will better meet the customer needs, rather than panorama for the lowest price.Consumer perception of price and value it is the consumer who decides whether a products price is right. When setting prices, the hotel must consider how customers perceive price and the ways that these perceptions affect customers acquire decisions, that means that the price must be buyer oriented. The price decision requires a creative awareness of the target market and recognition of the differences between the buyers.Analyzing the price-demand relationship the higher the price for a product or service is, the lower the demand for this product.Price elasticity of demand the hotel must understand how responsive demand will be to a change in price. If demand hardly varies with a small change in price, the demand is inelastic, if demand changes greatly, the demand is elastic. Buyers are also less price-sensitive when the product is rum or when it is high in quality. Consumers a re also less price-sensitive when easing products are hard to find. In case that the demand is elastic the sellers dispose to lower the prices in order to produce more revenue. There are several factors that affect price sensitivityUnique value yield creating the perception that your offering is different from those of your competitors avoids price competition.Substitute awareness nucleus lack of the awareness of the existence of alternatives reduces price sensitivity.Business expenditure effect when someone else pays the bill, the customer is less price-sensitive.End-benefit effect when the price of the product accounts for a large share of the total cost of the end benefit, the consumers are more price-sensitive.Total expenditure effect the more you pay for a product, the more sensitive you are for the products price.Sunk cost effect purchasers who have an enthronization in products that they are currently using are less apt(predicate) to change for price reasons.Price quali ty effect consumers unremarkably equate the price with the quality of a product, e superfluously in case that the buy the product for first time.Competition the hotel should consider the prices and offers that the competitors have before deciding its own determine. The hotel should make a research and collect information for the alive hotels and other hospitality establishments in the area, as concern their prices and the products that they offer.Other environmental factors economic factors such as inflation, boom or recession and interest rates affect set decisions. Meeting new government regulations can cause costs to increase or governments can streamline processes, reduce costs.Companies set prices by selecting a general pricing near that includes the followingCost Based PricesCompetition Based setPrestige determineMarket-Skimming PricingMarket Penetration PricingProduct Bundle PricingVolume DiscountsDiscounts Based on Time of PurchaseDiscriminatory PricingExplain briefl y the different strategies with fonts from the hospitality industry.Cost based pricing is a method in which a fixed sum or a percentage of the total cost is added to the cost of the product to father at its selling price. For framework, in hotels the F B manager use this method in order to decide the selling price for wines. They usually multiply the cost of the wine by 3 to make its selling price. A wine that is cost 20*3=60 is the price that the hotel is going to sell the wine.Competition based pricing is a price set by a company for a product to repugn other companies pricing, with less attention paid to own costs or the customer demand. The hotel may charge the same, more or less than its competitors. An example here is same category hotels which offer similar products and services, compete separately other by offering better prices in order to entice more lymph glands.Prestige pricing is a pricing strategy in which prices are set at a high level, recognizing that lower prices will slow down the sales but on the other hand consumers will associate a high price for the product with higher quality. High quality hotels and restaurants use this method of pricing in order to support their position as luxurious and elegant and these establishments usually targeted in a higher level market which interested in pukka services. In case that the establishment lowers its prices, there is a great possibility to lose its customers.Market skimming pricing is a pricing approach which is setting a high price when the market is price-sensitive to attract buyers with a strong desire for the product and the resources to buy it. This pricing method is utilize more in industries with high research and development costs such as computer firms. An example in hospitality industry is the hotels in Araxova during the winter season. In that period, hotels are setting higher prices because the demand for snowfall activities is higher, knowing that the strong desire for th ese activities will lead the consumers to pay.Market perceptiveness pricing is a method which is setting lower initial price to penetrate the market quickly and deeply, attracting many buyers and winning a large market share. For example a new hotel can open with lower prices than its competitors in order to attract more guests.Product bundle pricing is a strategy in which various products sold to a customer together and are offered in a price less than the sum of the prices of the products sold individually. An example here is when a hotel sells weekend packages in particular prices which include room and meals.Volume discounts is a method used almost from the hotels in which hotels have special rates to attract customers who are apparent to purchase a large quantity of hotel dwell, either for a whizz period or throughout a year. For example, hotels usually offer special prices to corporate skirmish planners. In such cases hotels can give the rooms with lower rates or make a deal with the meeting planner in every 20 rooms deemed one is free.A discount based on the time of purchase is a price reduction to buyers who purchase goods when the demand is lower. For example a hotel offers seasonal discounts in periods where the demand is lower in order to keep demand steady during the year.Discriminatory pricing often involves discrimination on the bases of race, religion, age or gender. Segmentation of the market and pricing differences based on price elasticity characteristics of the segments. In discriminatory pricing the company sells a product at two or more prices, although the difference in price is not based in cost. It maximizes the amount that each customer pays. For example a hotel can sell the same room in different prices depend on several facts if a guest is a habitual criminal usually the hotel offer a lower price for the room, if a guest book a room for first time may the hotel charge the room in a higher price, if a guest book two or more rooms the hotel usually gives better prices for the room. In the hospitality industry we have numerous examples of price discrimination.