Essay on How marketing strategy can build customer loyalty
Today the hotel industry is considered to be a global industry because customers and producers can be found in all parts of the world. For many customers, such services and hotel facilities as guestrooms, restaurants, bars, spa centers and a wide range of wellness services are “no longer considered a luxury” (Carev, 2008, p. 10). Marketing strategy aimed at building customer loyalty plays an important role in the hotel industry. Researchers believe that “in the last decades, demand for supply of hospitality services beyond that of traditional services intended for travelers have escalated the growth of the hospitality industry globally, leading to intense competition in the marketplace” (Carev, 2008, p. 11). Recent studies of the effectiveness of the hotel industry point out to the fact that it is necessary to improve loyalty of customers by “promoting interpersonal service encounters to build long-term relationships between customers and hotels” (Wang, 2007, p. 23). Today researchers provide massive opportunities for the successful marketing operations in the hotel industry. Hotel organizations face considerable challenges caused by the increased rate of competition. According to researchers, “competition has major implications for the customer, providing increased choice, greater value for money and augmented level of service” (Carev, 2008, p. 11). This study discusses how marketing strategy can build customer loyalty in the hotel industry.
Research objectives
The major research objectives include:
- To explore the role of marketing strategy in building customer loyalty in the hotel industry;
- To assess the proper strategies aimed at expanding customer loyalty;
- To find the proper ways to measure customer loyalty in the hotel industry.
Rationale of the study
This study is focused on exploring one of the most significant issues in the hotel industry marketing – the role of customer loyalty in the hotel industry. Marketing strategy can effectively build customer loyalty, providing benefits to customers and making hotel organizations more appealing due to price discounting. Hotel organizations should be focused on the delivery of high quality services to ensure customer satisfaction, which has a strong impact on the loyalty of customers (Liu, 2008).
Definition of the key terms
Customer loyalty
Customer satisfaction
Customer value
Literature review
This section reviews the literature on the role of marketing strategy in building the loyalty of customers in hotel industry. Marketing strategy specially developed for customer loyalty programs in the hotel industry guarantees success if the loyalty of potential customers is properly measured and expanded.
Building customer loyalty is crucial in the successful implementation of marketing strategy in the field of hotel industry. According to researchers, “since the beginning of the 1990s, customer loyalty has gained importance both in relationship marketing research and in business”(Cahill, 2006, p. 6). In the hotel industry, the loyalty of customers can be attributed to the increased role of changing competition environments. Marketers should assess the potential value generated by the loyalty of customers (Cahill, 2006). In other words, they should assess how loyal are the consumers of their products and services. The relationship marketing approach allows finding the proper strategies to expand customer loyalty (Cahill, 2006).
Besides, it has been found that there is a close relationship between customer loyalty and the organization’s profitability. As a result, marketing strategy plays an important role in building customer loyalty, which affects the hotel organization’s profitability (Carev, 2006). Researchers state that “when a company retains just 5 percent more of its customers, profits increase by 25 percent to 125 percent” (Carev, 2006, p. 3). Marketers need the appropriate information to develop effective marketing strategies aimed at loyal customers.
In addition, customer loyalty can be recognized as the key factor in the development of any business organization. Kandampully and Suhartanto (2000) explore the relationship between customer loyalty, customer satisfaction, and the company’s image. The researchers have identified the key factors of the company’s image and customer satisfaction that have a positive relation to the loyalty of customers in the hotel industry (Kandampully & Suhartanto, 2000). They provided the information taken from the chain of hotels located in New Zealand. It has been revealed that “hotel image and customer satisfaction with the performance of housekeeping, reception, food and beverage, and price are positively correlated to customer loyalty” (Kandampully & Suhartanto, 2000, p. 346).
It is very important to understand that in order to expand customer loyalty, it is necessary to increase customer satisfaction. According to researchers, “low quality service leads to low satisfaction, discouraging guests form returning”(Carev, 2006, p. 1). Actually, this assumption is taken into consideration by many hotel owners who are focused on expansion of loyalty (Carev, 2006). In other words, a hotel organization should provide high quality services to gain customer satisfaction and expand customer loyalty. Researchers suggest that hotel managers and hotel executives should use the proper strategies to influence the quality of services, brand loyalty, brand image and brand awareness in the hotel organizations, taking into consideration the relations between customer loyalty and brand equity (Kayaman & Huseyin, 2007).
In addition, hotel organizations aimed at expanding customer loyalty have more chances to avoid certain challenges caused by competition. Service quality is the key factor that helps to expand the loyalty of potential customers. Hotel organizations provide effective loyalty programs that can be viewed as marketing strategy aimed at enhancing customer loyalty (Kayaman & Huseyin, 2007; Wang, 2007). According to researchers, “corporate image is influenced both by service quality and customer satisfaction, which in turn influences customer loyalty” (Kandampully & Hu, 2007, p. 434). In other words, the key to expanding customer loyalty is to foster the image of the hotel organization through improved service quality and an increased number of satisfying customers (Kandampully & Hu, 2007).
Measuring loyalty stands for measuring the loyalty factors that includes the following aspects:
- saying positive things about the hotel;
- recommending the hotel to other customers who need the advice in this field;
- encouraging other customers to use the services of this hotel;
- considering the hotel the best option to buy services or products;
- maintaining business relationships with the hotel in the next years (Carev, 2008, p. 16).
As customer loyalty helps to protect the hotel organization from the effects of direct competition, measuring loyalty guarantees positive outcomes. It is very important to place emphasis on the dynamism of competition forces to assess customer value and its impact on the loyalty of customers. In general, marketers can measure customer loyalty by assessing the intention of customers to repurchase the services provided by the hotel organization, as well as by assessing customer satisfaction (Brennan et al., 2010; Carev, 2008). Those hotel organizations that are aimed at measuring the loyalty of their customers are focused on measuring customer satisfaction (Pearson, 2012). In some cases, they may face serious challenges because customer satisfaction is considered to be “the Trojan horse of loyalty” (Pearson, 2012, p. 56). Hotel organizations should develop the proper marketing strategy that will make investment in the so-called loyal customers, who will promote enduring relationships in the field of the hotel industry (Pearson, 2012). Besides, customer loyalty can be measured by “environmental attribute, managerial attribute and social attribute” (Liu, 2008, p. 49). These attributes give explanation to customer behavior and the intention to repurchase products and services. Marketers should take into consideration the changing tastes of customers in order to improve the quality of products and services (Liu, 2008).
Marketing strategy should be focused on building the relationship with customers. According to recent research “inspired by the airlines’ success, most major hotel chains have developed loyalty programs that reward customers for repeat business”(Hu et al., 2010, p. 128). The effectiveness of reward programs in building the relationships with loyal customers help to alter certain patterns of their behavior. The timing of rewards has a strong impact on customer loyalty for the hotel industry due to the moderated customer satisfaction (Hu et al., 2010).
Research questions
There are several research questions that help to discuss the importance of customer loyalty in the hotel industry:
- Is customer loyalty really critical to doing a successful business in the hotel industry field?
- What value does a satisfied customer may return to the hotel organization?
Critical discussion of data /evidence required
The key factors that influence the development of customer loyalty in the hotel industry should be properly assessed. It has been found that the most important determinant for customer loyalty is customer satisfaction (Carev, 2008, p. 10). The main issues for the discussion should be focused on quality of services which may encourage customers’ satisfaction and make customers perform the repeating visits to the same hotel organization (Rosenbaum et al., 2005). The required data or evidence is valid and can be effectively used in the research. Critical review of different studies on the role of marketing strategy in building customer loyalty has been done based on the useful evidence-based sources.
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