In this report, Handu Hotel, a famous local hotel in the city of Chengdu, China, was chosen to be analysed using the 7P marketing mix.

3. 7P’S ANALYSIS FOR HANDU HOTEL

The 7P’s analysis for this hotel would be including the analysis for the service product, price of service, promotional activities, place, people, processes, and physical evidences, which would be covered in the following contents:

3.1 Service Product Analysis

Based on the analysis of Jones (2008), the service product for the hospitality industry might be similar, which shall be the products and services that could offered to the customers to satisfy their needs in “daily lives” such as dining, entertaining, accommodation, and other sorts of needs in their daily routines. Thus the service product for hotels, one important part of the hospitality industry, as mentioned by Blankson and Stokes (2007) would contain the diversified service products for the customers so that the customers would not find the other service providers after they had found a quality hotel. This is also recognized as the trend for the hotel industry, as mentioned by Cizmar and Weber (2010), as there were increasing international standards for hotel industry willing to refer the diversification of services as an important item of criteria for assessing the overall quality of the hotels.

Based on the consideration of above and linking to the service products of the hotels, the services offered by the hotels might be including the following three categories:

• Accommodation services: accommodation is the main business of Handu Hotel, through which this hotel had offered the customers related services including the hotel reservation, car and bus parking, luggage handling and storage (temporarily), room cleaning, bathing, laundry, as well as special services including morning call.
• Entertaining services: the customers’ needs for entertainment could also be satisfied in Handu Hotel as well, in this hotel customers could do exercises in the gym, swim, play all sorts of in-door sports such as table tennis, pool, and squash. Besides of the sports, customers might enjoy singing in the KTV of Handu Hotel or have a drink in the pub, also it could go to the cafeteria to have a cup of coffee and listen to the piano play. Handu Hotel also offers several in-room entertaining facilities – the TV and internet access, customers might be able to watch TV or get access to internet with their own laptop or rent computers from the hotel.
• Dining and shopping services: altogether there were five small restaurants in Hando Hotel where people could enjoy traditional Chinese foods, Chengdu spicy foods, Hongkong foods, Japanese and Korean foods, as well as sea foods. Customers could also buy their living necessities, packaged foods and drinks, as well as souvenirs from the small supermarket in the hotel.

3.2 Pricing Analysis

Prices might not be the decisive reason for the customers to choose the service providers, but they are definitely one of the most prior conditions the customers need to consider before choosing their services (Beaver and Harris, 2010). As for the hotels, pricing strategies might be even more complicated and might not be easily developed (Blankson and Stokes, 2007), because it would not easy to count all the values received by the customers in terms of the diversified services they offered to them, which might make it difficult for offering suitable prices for the customers as well (Deng and Dart, 2009). However, based on the condition that most of the Chinese hotels in the touring cities would have over 75% of their customers from the travel agencies, Cai (2010), hotels might not have sufficient bargaining power towards its customers, especially for the large sized travel agencies in China.

Based on the above analysis, it might be needed to categorise the pricing strategies for Handu Hotel from the prices that are available for individual customers and those for the travel agencies as a group of travellers, the detailed analysis is shown in the following:

• For individual customers, the standard room (with two single beds) costs individual customers 300 RMB one day, and reservation one month ahead would have 10% discount for this price. Also the standard room would be priced at 99 RMB for six-hours in the day time, which was offered for the customers who need a snap. Besides of that, the following are the detailed prices for the services:

• Entertaining services: services for entertainments were generally higher than the ordinary costs in Handu Hotel, with the rate of 10-20%. Taking pool and KTV services in this hotel as example (according to experiences of the two group members), usually playing pool in China would cost the customer 50-60 RMB one hour, and it costs 80 RMB in this hotel; also KTV ordinarily costs for 80-100 RMB one hour, in this hotel the charge was 150 RMB for the ordinary sized rooms.
• Food services: food services were basically the same with the external places as the restaurants in the hotel are self-operated. However, if using room services to order food from those restaurants, an extra 50 RMB would be charged for the service.

• For the travel agencies, as mentioned by Cai (2010), hotels would offer large amount of discounts for the group of customers based on either long-term contract with the travel agencies or a temporary reservation with the travel agencies every time before the group is taking off to the destinations. Also in the research of Heng and Cha (2007), their empirical research of Chengdu hotel industry had involved the pricing strategy of Handu and the other locally famous hotels for the travel agencies – for the travel group that contains lower than 15 customers, a 15% discount would be offered by the hotel in the prices, whilst for the travel group that contains higher than 15 customers, a 20% discount would be offered, together with the free of room charge for the guide. As for the prices for entertaining and other services, travel agents would not have price discounts anymore.

3.3 Promotion Analysis

Promotional strategies for the service industry might be focusing on two aspects of objectives – to attract new customers to come and enjoy the services, as well as to retain customers with suitable loyalty programmes (Cizmar and Webet, 2010). In terms of the hotel industry, according to Blankson and Stokes (2007), usually small hotel chain would make the promotional activities including small range of advertising, word-of-mouth strategy, as well as the loyalty programmes for the existing customers, also Cai (2010) had mentioned about the discounts for VIP customers and the collaboration with those “group buy” websites are the frequently seen strategies in Chinese hotel chain.

With the consideration of the above analysis and linking to Handu Hotel’s practices in its businesses, the promotional activities for this hotel might be including the following activities:

• Advertising: Handu Hotel had developed various advertisements via different media, including the printed advertisements in the local famous newspaper Chengdu Daily, as well as the online advertisements in the travelling websites of China as well as the contracted travel agencies’ portal (Heng and Cha, 2007).
• Word-of-mouth strategy: Handu Hotel is focusing on word-of-mouth strategy among its customers like most of its competitors in this industry. In the lobby of this hotel, customers could see the manifesto of this company that “tell Handu to your friends is to tell a place of heaven to them”, “tell your friends about our good, tell us about our bad”, and etc. This might potentially guide the customers to tell their friends if they had a joyful experience in this hotel. Moreover, in order to stimulating the word-of-mouth effect among the customers, Handu Hotel would offer coupons for the customers when they are checking out, this coupons could be used by anyone except for the coupon receivers, through doing this the customers could invite their friends to go to this hotel after that.
• Sales promotion: sales promotion of Handu Hotel might mainly be seen from its offering of discounts for the early-reserved customers as well as for the travel agencies for large amount of customers. Besides of that, the sales discounts would also be offered to the customers who are disabled or elder than 65, which would be seen as a way of fulfilling its corporate social responsibilities.
• Customer loyalty programme: the customer loyalty programme was offered by Handu Hotel as the main way to increase the customer loyalty towards this hotel. However, this might be achieved through mainly two tactics: 1) it offered VIP membership for the customers who would spend 15 RMB for the card, with the VIP card, customers could have various privileges including 5% discounts for the rooms, priority in room reservation as well as annual magazine about Handu Hotel send to their address; 2) for the customers who had checked in over 10 times in Handu Hotel, they would acquire the VIP card free from the hotel, through which they would be able to enjoy the VIP privileges mentioned above.

3.4 Place Analysis

Place strategy might be described as the locations where the hotels might be placed, which might be considered not critical because customers would go to the place anyway (Brooksbank, Kirby and Taylor, 2009).

As for Handu Hotel, currently this company had only one hotel, located in Jinniu District of Chengdu, P. R. China. Jinniu District is a famous CBD of Chengdu emerged and developed after 2000s, which had now become one of the most important commercial areas in the South-western China. As for Chengdu, gradually being the center of Chinese south-western area, had attracted millions of travellers each year, which had also become the reason for the high room occupancy rate in Handu Hotel (higher than 80%).

3.5 People Analysis

People management would be important for the service industry because it is a matter of fact that all services are offered directly by staffs of the service providers and the quality of people management could thereby directly affect the customers’ satisfaction as well as willingness of consumption with the service providers (Cizmar and Weber, 2010). Also according to the empirical research results conducted by Wilson and Stokes (2009), employees’ job satisfaction would largely decide and correlated with the customers’ satisfaction in most of the hotels, which had stressed the importance of rational and effective people management for the hotels and other service providers.

With relating to the people management in Handu Hotel, based on the experiences of the group members as well as the relevant researches, the people management could be stated from the following aspects:

First of all, the people management activities might be involving the following activities in the portal of this hotel (Handu Hotel, 2011b).

• Recruitment, selection and induction for new employees and graduates;
• Practical training courses offered for the employees periodically;
• Teamwork and company value and culture fostering;
• Performance appraisal and fair reward – punishment mechanics (monetary based, including monetary rewards for good behaviours and monetary fines for mistakes or unfriendly treatment towards customers);
• Employee relationship building (between individuals and between employee and hotel).

Besides of that, based on Feng’s empirical study of several Chinese hotels including Handu Hotel (2009), the staffs’ responsibilities of this hotel in terms of the service contact towards customers might be including the following aspects:

• The help and support to customers appropriately. This might include all the possible helps that the staffs could offer to their customers in the hotel;
• The communication with the customers, which was undertaken as one main way of collecting information including newly emerged customers’ needs and wants towards the hotel services as well as the customers’ satisfaction towards the hotel.

3.6 Processes Analysis

Processes are seen importantly for service providers such as the hotels, as mentioned by Heng and Cha (2007), because it might represent the ways through which the services are delivered to the customers. However, in terms of the hotel industry in specific, according to Cai (2010), the processes of this service might be including the interactions between hotels and customers, between customers and hotel staffs, as well as between hotel staffs, based on the fact that the services are produced whilst consumed for the customers.

Therefore, the processes for the hotel could be analysed from the following three aspects:

• Hotels & customers: this might be including the facilities offered by the hotels for the customers and various kinds of information and consultations offered for the customers to help the customers as well as the hotel could do in the journey of the customers. As for the customers, the hotel is keen on collecting the customers’ general attitudes and satisfaction towards the hotel, therefore, Handu had left notebook for the customers to write any complaints and appraises or any other words the customers wished to say to the hotel and hotel employees.
• Staffs & customers: staffs are making direct service contact with the customers and their interactions with customers might be more important in terms of this. This interaction might be including the staffs’ efforts paid to the customers as well as the hotel’s facilities to make sure customers could enjoy the service as expected. Also the staffs would offer extra services or unexpected services for the customers in the hotel, which might include the answering of simple questions, the teaching of customers of using the facilities offered by hotel, and etc.  
• Staffs & staffs: based on Handu Hotel (2011b), the staff interactions of this hotel might be including the involvement of staffs in designing and adjusting service processes through monthly meeting of staffs, this might be the opportunity for capable employees to be emerged and found out by the hotel and usually the suggestions from the staffs might be valuable and practical as they had seen them from the customers’ needs; also the staffs were made involved in some socializing activities of the hotel internally, such as birthday party for managers or festival party in important festivals, through which the company hoped the employees could have their interpersonal relationships strengthened together with an increased satisfaction in the work.

3.7 Physical Evidence Analysis

Physical evidence for service products might be similar to the tangible products, which might be including the environment, communication, prices, as well as information that the hotel offered to the customers (Blankson and Stokes, 2007).

Therefore, the physical evidence could be analysed in the following areas of contents for Handu Hotel except for price (which had been analysed above):

• Physical environment: the living environment in Handu Hotel is comfortable and nice, in the lobby of the hotel, there were friendly scents spread by fresh flowers in the corridors, and all the facilities and furniture of rooms were polished without dust. More importantly, due to the fact that the hotel is build in the center of the city, sight viewing in the hotel room is fascinating, which might leave strong image among customers’ minds (Handu, 2011c).
• Information and communication tactics: customers could easily acquire the information they need about the hotel and the city in this hotel. Other than the experienced room service staffs, the hotel offers professional traveling consultants that could offer consultation services for the customers who are willing to travel around the city (ibid).

4. RECOMMENDATIONS FOR HANDU HOTEL

With the above analysis for the 7P’s for the service marketing of Handu Hotel, problems and suitable recommendations could be also cited based on this analysis, however, with the analysis of this, the recommendations could be offered in terms of the areas of prices, promotions, people, and processes strategies for this hotel.

4.1 Recommendation for Price Strategy

Based on the above analysis, the price strategy of Handu Hotel might be chaotic and also not flexible in facing with the competition in the market. Therefore, following two recommendations might be needed for the price strategy for this hotel:

• Firstly, a generic price strategy might be needed for Handu Hotel, this might be a cost-based strategy, competitive-based strategy or customer psychology-based pricing strategy. With the defining of the generic price strategies for this hotel, all of its pricing activities could be strategically guided and customers would be less possibly to not choose Handu Hotel’s services due to the irrationally defined prices;
• Secondly, Handu Hotel might need to offer more flexible prices for its hotels based on the current market conditions. There are always good months and off-season for any hotels based on the flow of tourists in different time of the year, therefore, in those months when the hotels are having full reservations of all of its rooms, the hotel might need to raise its prices for the room, whilst in the months that reservations for the rooms are much fewer, the prices could be lowered in stimulating the customers to come.

4.2 Recommendation for Promotional Strategy

Similar to the price strategy, the promotional strategies adopted by Handu Hotel might also be inflexible or even “outdated” for the customers. Based on the consideration of the above, following recommendations might be offered for the hotel:

• The collaboration of group buy websites: just as mentioned in the above analysis, group buy websites, such as Groupon in the US, had also emerged in China and it is the industrial trend for service providers to collaborate with those websites to offer lower priced services for the customers. This, however, could allow the hotel to acquire more customers based on the lower prices and the promotional activities of group buy websites.
• Besides of that, Handu Hotel might seek B2B promotional strategies, through which the hotel could have its name heard or its brand aware by the travel agencies, and this could help Handu bring much larger amount of customers by the travel agencies. Those promotional strategies might be including the personal selling strategy such as telephoning the travel agencies seeking collaboration and sending invitation letter for local travel agencies to come and visit Handu Hotel.

4.3 Recommendation for People Strategy

The people strategy for Handu Hotel is comprehensively designed, however, it might not effective with lacking of the focus of training for employees as well as satisfaction of employees in their work.

• Firstly, Handu Hotel might need to make the staffs’ training covering wider range of contents such as the customer behaviours, communication, as well as basic managerial skills for the employees, through which the employees could have better understandings about their customers and also have boarder career paths in the future;
• Secondly, Handu Hotel might need to focus on the staffs’ satisfaction in their work not only through just saying it. Employees’ satisfaction had been proved to directly linked to the customers’ satisfaction, therefore, the employees’ satisfaction is an important issue for the service providers, based on the concept of which, Handu Hotel might need to increase its mental rewards (not just monetary rewards) such as the recognition and appreciation for their employees, also the management of the hotel might need to show respect to the employees’ efforts and should develop frequent employee surveys for identifying potential problems affecting the employees’ job satisfaction.

4.4 Recommendation for Processes Strategy

The processes strategy of Handu Hotel was roughly designed, which might be seemingly good, but actually the lacking of standardizations for its process would be bothering this hotel for more than a chaotic customer service when the hotel is growing larger, but also the complaints and dissatisfaction of customers together with the loss of reputation of the hotel. Actually standardization could make sure that all processes are under good management, and also standardization is a necessary way to allow the hotel to conduct total quality management within the organisation with the final result of raising customer satisfaction towards the services they received.

Therefore, standardization shall be build for all the processes of the hotel, which could make the employees’ efforts effectively guided in the current time and in the future.

5. Conclusion

In conclusion, this report is generally about the 7P’s analysis for the strategies of Handu Hotel, a typical service provider in China, based on the personal experiences and recent literatures. Other than the 7P’s analysis for the hotel’s strategies, four areas of recommendations had been proposed as well in terms of the areas of price, promotion, people, and processes, which might need the hotel to consider about and make adjustments correspondingly.

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