Part I
In the world of the “new economy” marketing can make or break a product. This is especially true when a company is developing a new product for a current market. The strategy used in this instance is the product-development strategy from the Ansoff Product Market Expansion Grid1. This is just one of the four strategies in the Ansoff Grid, and the only one that applies to our Hilton Timeshare project.
The Marketing Strategy
New product development includes the overall process of strategy, organization, concept generation, product and marketing plan creation and evaluation, and commercialization of a new product2. Or put more simply, product development is a strategy for enhancing benefits you deliver to customers by developing new products and services 3. For an example of the product development strategy let’s take a look at Starbucks. Starbucks had established itself as a gourmet café, but wanted to increase the number of purchases by existing customers with a product development strategy. Utilizing this strategy, Starbucks began carrying new in-store products including compilation CDs and Joe lifestyle magazine1.
Dissecting The Strategy
When developing this strategy and creating our marketing plan, we must first perform an evaluation of our strengths, weaknesses, opportunities and threats (a SWOT analysis). As an example of this we’ll look at Honeywell. Honeywell asks that all departments in the company rate their strengths and weaknesses and those of other departments with which they interact. The idea behind this is to recognize that each department is a supplier of some departments and a customer of other department. Each individual department can then be held responsible for its costs and completion times; by becoming more efficient they will be helping their “internal customers” to become more productive, thereby increasing the total efficiency of the company 1.
SWOT Analysis For The Hilton Timeshare
Strengths:
- Reputation, image and brand recognition
- Physical infrastructure and financial resources
- Bargaining power
Weaknesses:
- Inexperience in the timeshare industry
Opportunities:
- Growing Market
- 12% growth rate in 2002
Threats:
- Federal Trade Commission Act
- Enforcement and enactment has made it challenging for the industry to connect with consumers through telemarketing, a primary tool used by timeshare companies
- Bad image of the timeshare market to many people
A marketing campaign based on our reputation and brand will help us take advantage of the growing timeshare market. Consumers will feel more comfortable buying a timeshare from Hilton due to our strong reputation in the hotel market. We also need to gain a more in-depth understanding of the timeshare market as a whole to make-up for our inexperience in the new timeshare market. With respect to the FTC Act governing telemarketing calls, we will have to depend on other means through which we can create an awareness of our new brand.
Competitive Advantage
There are two main types of competitive advantages:
- Cost
- Differentiation
Being a large hotel chain, we can cut our costs based on our very high bargaining power in the market. We also have competitive advantages over differentiation based on our segmentation, targeting and positioning. Segmentation is the process of dividing a large and heterogeneous market into more homogeneous subgroups. Each subgroup, or segment, holds similar views about the product, and values, purchases, and uses the product in similar ways 2.
Tutor2u.net explains how the UK leisure travel industry can be segmented in seven ways: transportation, destination, accommodation, flexibility and customer management, activity, duration and price and quality. Targeting is the process of selecting potential customers for marketing efforts. This market segment is most likely to buy the products within a given category. These are sometimes called "prime prospects."
Positioning is differentiating your product against those of your competitors with respect to the features and options of your product. An example of targeting and positioning would be Volvo developing cars for those target markets to whom automobile safety is a major concern and thereby positioning its cars as the safest a customer can buy.
After our careful analysis we now know to put extra emphasis on understanding the brand and to be consistent with our brand image as illustrated in the Starbucks case. It is also equally important to understand the business we are in by matching our strengths and weaknesses with the opportunities and threats to allow a successful creation of sustainable competitive advantage.
