Lake Superior Lodge: It’s Not Always About “Location, Location, Location”
Introduction
Every organization needs an effective marketing plan to enhance the attraction and positioning process to make the business profitable, sustainable for a long run in the competitive market. The management of the company, especially in the hotel industry, cannot take advantage of the location. It has to make effective marketing strategies to increase customer traffic and increase revenue stream. The Lake Superior Lodge has an attractive hotel design to facilitate the guests. However, the management is looking to conduct market analysis to form a big marketing plan.
· Problem Statement
The Lake Superior Lodge is struggling to attract customers in the hospitality industry due to poor marketing efforts and changing industry trends. The need for a marketing plan is in the limelight because the firm cannot survive in the competitive landscape without gaining a competitive edge.
Situational Analysis
The hotel industry is one of the largest industries in the United States and many other countries. In 2011, the US hotel industry contained revenue of 137.5 billion, and it is still increasing due to competitive strategies and revolutions in the hotel management. Full-service hotel brands are looking to differentiate services to enhance the visibility of attraction and increase the brand image. Lake Superior Lodge contains 15 rooms, which are comparatively less than other hotels (Maamoun, 2013). The overall business situation is good. However, to get deep insights, strategic analysis can be done. The use of SWOT analysis is effective, as it can identify strengths, weaknesses, opportunities, and threats for the business. It articulates the current situation of the business that can help to make an effective marketing plan.
SWOT Analysis
· Strengths
The unique location at the practical price has become a major strength of this company. Travelers are provided with clean and comfortable lodging in this company, and it has increased the brand image. The financial position of the company is quite strong. The firm has the financial capability to expand the business in different areas. The average revenue growth of the company is 5.8%. It is a good growth rate, and it is also a big strength of the company (Maamoun, 2013).
· Weakness
The company does not have an effective marketing plan that leads towards poor sales and positioning. Despite having the good location, it has not been a top preference of customers. Another major weakness of Lake Superior Lodge is that it is not family friendly due to only having one double bedroom. With no amenities, restaurant, or swimming pool, it is tough for the management to break the ice and welcome customers. Lack of facilities is also a big weakness, and it must be considered to exist strong in the competitive hotel industry (Maamoun, 2013).
· Opportunities
It is a great opportunity for the Lake Superior Lodge to conduct a market analysis and derive some insights to make a workable marketing plan. Interestingly, business expansion is also a good opportunity for this firm. The number of rooms can be increased. Also, including facilities in the lodging process can help to turn on profitability (Maamoun, 2013).
· Threats
The competition is a big threat to the Lake Superior Lodge. Garden wood resort and motel, Voyageur Lake Walk Inn, and Gitche Gumee are main competitors. Differentiated services and strategies are threats to the company. The biggest threat to this company is the winter season. The business is almost dead in winter. It can put a huge dent on financial growth and capability. Demolishing and rebuilding the business is risky for the firm because it can be costly (Maamoun, 2013).
Alternative Strategies
· Penetration Pricing
Based on the analysis, it has been revealed that the company is running out of profit. To be profitable in the competitive market, the firm should integrate with the pricing strategy, which is also a prominent element of the marketing mix strategy. The best thing that the company can do to enhance the visibility of attraction is to use a penetration pricing strategy. Offering high-quality lodging services to customers at low prices as compared to competitors is a good approach to make the difference and enable favorable cash flow (Hudson, 2008). Internally, the firm has to create a culture that supports efficiency to produce low-cost services. In the external business environment, the firm has to analyze the competitive situation, market circumstances, and market demand to make this pricing decision. The purpose is to increase the company’s image, attract customers, boost sales, and streamline profitability (Kotler, Bowen, Makens, & Baloglu, 2016).
· Service Development
The second alternative strategy is to increase the service line and enhance public relations and sales promotions. Increasing the service line such as the number of rooms, amenities, swimming pool, and restaurant is a good idea. Based on customer needs or market research, the firm can develop relevant services and use several promotional tools.
· Destination Marketing
The third alternative marketing strategy that the customer can adopt, or embrace, is destination marketing. The location of the Lake Superior Lodge is quite attractive in the town. The firm can promote a particular destination to increase the number of visitors. France contains the top position in the world’s top tourism destination. The United States of America is ranked 2nd with 66.7 million arrivals every year. Thus, it is a great opportunity for the company management to promote the north shore of the lake, majestic sunrises, and wonderful international ship traffic. The distance of the location from the hotel is less than other competitors. Therefore, destination marketing can become the priority of the company regarding the marketing plan (Kotler, Bowen, Makens, & Baloglu, 2016).
Evaluation/Decision Criteria
When evaluating the decision, it is necessary to use decision criteria. The decision criteria are based on three main factors, which can have an impact on the decision-making process. For Instance, Cost, the effect on the company’s image, and speed of implementation are three factors. The company management is looking to evaluate the decision regarding the scores of these factors.
· Pros of Alternatives
The big advantage of the penetration pricing strategy is the increase in sales and attraction. Even without amenities, swimming pool and fewer facilities for families, people can be attracted due to low prices and quality services. Another key advantage that the company can gain is the effect on the brand image. The high-quality lodging services at comparatively low prices are an image booster in the competitive hotel industry.
The advantage of sales promotions and public relations is the high profitability. It seems a journey to make customers loyal and increase word of mouth as well. If the company intends to increase the service line to facilitate customers, public relations is the best marketing trait for promotion. To promote the service, quality, and pricing, sales promotions can be a great tool to communicate with customers effectively.
The biggest advantage of destination marketing is the promotion of the whole town, culture, traditions, and norms. The firm can market several associations, which create an impact on sales and operations.
· Cons of Alternatives
Penetration pricing strategy may take a long time. To depict the penetration pricing strategy, the firm has to reshape its work culture to produce low-cost services. The firm wants to keep high-profit margins, and it seems tough in initial years.
The disadvantage of sales promotion and public relations is the high cost. Already, the firm aims to increase the services in the form of amenities and many others. New developments may be costly for the firm. Promotion and public relations may also increase the cost, and it looks the major disadvantage.
The major disadvantage of destination marketing, which is intended to increase profitability, is it design. The marketing campaign is limited to the location or destination along with cultures and resources. However, the ultimate need of the guests is to get high quality and differentiated lodging services to make operational decisions.
· Decision Matrix
| Criteria | Penetration Pricing | Service development | Destination Marketing
|
| Cost | 4 | 3 | 3 |
| Effect on Company’s Image | 5 | 5 | 3 |
| Speed of Implementation | 2 | 4 | 4 |
| Total Score | 11 | 12 | 10 |
The scale of 1-5, 5= highly favorable, 1= highly unfavorable
Service development is prominent due to its high score.
Recommendation for Alternative (Service Development)
· Integrated marketing communication Strategies
All services can be promoted through Itinerary package. It seems a modern trend in the hotel industry. The firm will help travelers have a proper travel guide and plan their days. The lodging service must be flexible enough to integrate with the plan of the traveler. When a family stays in the hotel, free vouchers and tickets of local attraction points are key promotional tools. Of course, more customers will prefer this hotel to get these benefits. Celebrating unusual holidays or dates is a key promotional tool for the firm. (McCabe, 2010) On popular holidays, Lake Superior Lodge can increase the occupancy and streamline the custom menus and activities. Public relations are to be improved through the loyalty program. For Instance, Lake Superior Lodge aims to offer a free night stay with its loyal and regular customers (Kotler, Bowen, Makens, & Baloglu, 2016).
Lake Superior Lodge has decided to implement sales promotion and public relations as a key marketing strategy. The marketing plan of the company revolves around this key strategy due to pertinent advantages and relatedness with profitability. For Instance, Increase the number of rooms from 15 to 30 is not a big deal. However, the inclusion of facilities and promoting these by using the above-mentioned promotional and public relation trait can help the firm increase guest traffic, boost sales, and enable profitability. The firm intends to accelerate the attraction and create a larger customer base to get the advantage over the other rivals. More customers in Lake Superior Lodge can lead to more profitability (Hudson, 2008).
· Advertising
Integrated marketing communication traits are highly recommended to implement the strategy. Sales promotion and public relations are part of the ICM. However, the major element is advertising on different media channels. The most effective advertising on both social and traditional media channels can help to communicate and interact with customers and build a long-term relationship effectively. For Instance, in different advertising campaigns, the management can streamline promotions. Thus, instead of face-to-face meetings with customers, the message can be spread through channels (Kotler, Bowen, Makens, & Baloglu, 2016).
· Continuity and Coherence
Continuity and Coherence are highly recommended. It is to ensure by the management that all promotions are pertinent to the needs of guests. To be more lucrative in the hotel industry the coherence in sales promotions and public relations is mandatory.
Rationale
The rationale of using or recommending powerful marketing tools, derived from e integrated marketing communication is quite pertinent. It is a low-cost market plan or strategy that can help the firm contain the growth in no time. It is easy to adopt, cost-effective, and lucrative. The cost may create a problem in this process. However, it is a part of this thoughtful consideration.
Evaluation of decision & Contingency Plan
The decision of service development by using integrated marketing strategies is workable in the hotel industry. However, in this competitive landscape, the firm may face intense competition in the form of imitation, differentiation, and modern trends. Thus, destination marketing is a second plan for the company in case of any failure. Nevertheless, the probability of success is high, and the firm is quite up to it.
Conclusion
In the end, it is to conclude that rethinking the entire marketing strategy is a good approach to make the business profitable. In the competitive landscape, the management has to contain some thoughtful consideration to streamline key marketing ideas and get a competitive advantage. Lake Superior Lodge, due to its financial and strategic capability, is a success. After a comprehensive analysis of the business and market situation, three alternatives such as penetration pricing, service development, and destination market have been proposed. After illustrating the pros and cons, these alternatives are evaluated through decision criteria. Service enhancement or development is the best alternative, and the firm is recommended to use integrated marketing communication traits to implement the strategy,
References
Hudson, S. (2008). Tourism and Hospitality Marketing: A Global Perspective (1 ed.). London: SAGE.
Kotler, P. T., Bowen, J. T., Makens, J., & Baloglu, S. (2016). Marketing for Hospitality and Tourism (7 ed.). Malaysia: Pearson.
Maamoun, A. (2013). Lake Superior Lodge: It’s Not Always About location location location. Retrieved from https://hbr.org/product/lake-superior-lodge-its-not-always-about/W14087-PDF-ENG
McCabe, S. (2010). Marketing Communications in Tourism and Hospitality (1 ed.). New York: Routledge.
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