Case Study: Services Marketing

This is a scenario for use in teaching services marketing.

Chain Hotels is a chain of 43 mid-market hotels in the UK. They are popular with business travellers who comprise 85% of customers. Locations are edge of town, motorway and A-road services and town centres. They are all company operated. Restaurants are basic with a limited menu which does not vary. All have business centre facilities, meeting rooms, wi-fi etc. Room décor is one of four standard decors. Any one property may use any or all of the four for their rooms but only these four are available for the whole chain.

Despite being a largely successful business, the hotels tend to have high staff turnover and suffer from a persistent failure to live up to service standards. There is also a problem with low occupancy at weekends.

Chain Hotels has recently acquired another smaller chain called Croft Hotels – 20 properties. All the hotels in the Croft chain are owner operated. They have a variety of locations: seaside resorts, provincial town centres and in the countryside. They generally maintain a very high standard of service and this was the main concern of the founder of the chain, though there are no properly defined service standards. The restaurants vary from property to property but are mostly high quality. Market research in the past has shown that Croft has a small but remarkably loyal following. Owners are committed to the brand and its values of high customer service. Staff turnover is low. However, profits are also low. Nowadays the chain lacks a definite brand image. There are no chain wide promotions. None of the Croft hotels has business centre facilities and most offer no wi-fi. Room décor is the decision of the managers of the particular property.

The CEO of Chain Hotels has recently been replaced and the new CEO is worried about the acquisition of Croft. She wants to take a fresh look at the situation and has called in your team of independent consultants to advise.

Your preliminary investigations reveal:

• Croft Hotels do not know the profile of their customers. They are probably a mixture of business travellers, private travellers and tourists but it is not known in what proportions.

• Croft hotels all have very high quality toiletries and cafetieres in all rooms.

• The Croft web site has not been updated for 5 years. It does allow bookings but the site is generally difficult to use.

• In the Croft chain it is the seaside properties that perform the best in terms of occupancy and profit.

• Chain Hotels have tried offering leisure break promotions to fill rooms during slack periods but have had no success.

The CEO of Chain asks you to consider these questions and report back to the board:

1. What should the brand architecture be? Should they be integrated into one brand or kept as two distinct ones. If kept distinct, should it be made apparent that Croft is under the Chain umbrella?

2. What can Croft learn from Chain? What can Chain learn from Croft? How would you recommend that knowledge transfer could be brought about?

3. Using the services marketing mix, in broad outline recommend a marketing strategy for the company.

4. The CEO is worried about the issue of charging for wi-fi. What would you recommend?

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