Methods for analyzing industry competition in the hospitality industry
A general approach to the analysis of the industry. Any organization, including a hotel, always belongs to one or another branch structure.
By industry is understood the totality of organizations producing similar products and services sold in the same market.
Industries, as well as products and services, are characterized by a life cycle. They can be innovative (nascent), developing, mature and industries experiencing a decline.
To determine the impact of the industry on the activities of the hotel and conducted an industry analysis. Its main task is to determine the key characteristics of the industry, on the basis of which further detection opportunities are revealed:
• stages of the life cycle of the industry and especially the moments of changing one development cycle to another;
• The revenue potential of the industry;
• forces that can increase and reduce the profitability of the industry;
• Areas for providing industry competitive advantage and key success factors;
• Industry prospects and its overall attractiveness;
• The main parameters of the hotel marketing strategy.
Another important task of the industry analysis is the establishment and forecast of key success factors.
Key factors of the industry's success are managed marketing variables common to all organizations of this field of activity, the implementation of which enables to improve the competitive positions of hotels. Key success factors are determined by the stage of the life cycle of the industry, the main indicators of its development, the presence and the state of competition in the market.
Using the model of M. Yorger's competition for industry analysis. With the help of M. Porter's model it is possible to determine which forces determine the degree of competition intensity in the industry and influence the profit potential.
Hotels offering similar products and services pay special attention to the study of direct competition and the factors affecting it. But they alone determine the industrial competitive environment. It is also influenced by hotels that provide products (services) - substitutes (substitutes), new hotels in the industry, as well as suppliers and customers (Figure 3.4).
All listed subjects of market relations under certain conditions can significantly influence the strength with which competition is being waged, to change the position of the hotel on the market. Let's consider in more detail these components in the following example.
We will consider that the industry consists of a group of hotels (the hotel industry). To assess current and future market forces in the future,
Fig. FOR. The model of the five forces of competition M. Porter
of the triage industry will use a five-point scale: 5 - means a powerful force of impact, and 1 - a weak one.
The current analysis of the state of the hotel industry using five market forces showed:
1. Entrance barriers, affecting the penetration of new hotels in the industry, are estimated at 5 points. This is determined by the following factors:
• economies of scale (production and marketing), which ensures a low level of prices and production costs for hotel products and services;
• A significant level of necessary capital for introduction into this industry and high risks associated with the production of new hotel products and services;
• existing consumer preferences, their attachment to existing hotel brands for hotel products and services;
• the availability of product differentiation (the ability of tourist organizations to ensure the uniqueness of goods and services produced).
2. The consumer market power is estimated at 2 points:
• difficulty in finding similar hotel products and services from competing hotels;
• the uniqueness of the hotel products and services offered;
• stabilization of prices for hotel products and services.
3. Suppliers' market power is estimated at 2 points:
• well-established system of relations with suppliers;
• No difficulties in providing hotels with the necessary materials, equipment, technologies, etc.
4. The growth of the market, determining the rivalry of industry hotels, is estimated at 5 points:
• Individualization of quality guest services contributes to the increase in demand for hotel products and services;
• the small number of hotels providing similar products and services;
• The absence of foreign hotels providing similar products and services.
5. The threat of the appearance of products- (services-) of substitutes is estimated at 2 points:
• Lack of consumers' inclination to substitute services;
• High cost of switching to other services.
Conclusion. Current competitive forces in the industry are weak, and the profitability of the industry is high.
The long-term forecast of the state of the hotel industry (three years ahead) using five market forces showed:
1. Entrance barriers , affecting the penetration of new hotels into the industry, are estimated at 3 points:
• there will be an increase in economies of scale (production and marketing), which will ensure a reduction in production costs and a somewhat restrained growth in prices for hotel products and services;
• the level of the necessary capital for introduction into the given sector will slightly increase;
• consumers' preferences, their attachment to acting brands to hotel products and services will be weakened due to the appearance of similar services to a foreign company;
• The ability of hotels to ensure the uniqueness of products and services produced will decrease.
2. The market power of consumers is estimated at 4 points:
• it becomes easier to find similar products and services of competing hotels;
• consumer cohesion is increasing;
• prices for hotel products and services are rising.
3. Suppliers' market power is rated at 4 points:
• the system of relations with suppliers gives periodic failures;
• There are some violations of contractual relations with suppliers;
• the emergence of individual difficulties in providing hotels with the necessary materials, equipment, technology, etc.
4. The growth of the market , which determines the rivalry of industry hotels, is estimated at 3 points:
• slowing the growth of the market and the demand for hotel products and services;
• access to the market of hotels providing similar products and services;
• the appearance of a foreign hotel that provides similar products and services.
5. The threat of substitute services is estimated at 4 points:
• the emergence of consumer addiction to substitute services;
• reducing the cost of switching to other services.
Conclusion. Three years from now:
• Strengthening of competitive forces in the industry, including the growth of competition between direct competitors;
• a significant reduction in entry barriers to the market;
• Strengthening the power of consumers and suppliers;
• increasing the threat from substitute services.
As a result, the profitability of the industry will decrease to an average, and the life cycle in the future may slightly shift from the stage of growth to the stage of maturity, which will help slow down the sectoral development. At the same time, enterprises will accumulate sufficient experience in reducing production costs, upgrading the skills of the personnel, individualizing the service. However, the transition of the industry to the stage of maturity will lead to an increase in intra-industry competition. At the same time, there is a danger of the emergence of new competitors - foreign hotels, which can lead to an even greater aggravation of competition.
It is also necessary to take into account the changes taking place in the macro environment. We will consider that the state of the macro environment for the analyzed industry is determined by four factors, including a reduction in the tax burden on hotels, favorable weather conditions for business, the use of progressive service standards (have a positive effect on the activity of branch hotels), the difference in the exchange rates of major currencies on the activities of hotels in the industry). Taking into account these aspects, the forecast of the state of the industry for 3-5 years ahead is made.
All these possible sectoral changes should be reflected in the corrected or newly developed long-term marketing strategy of the organization.
Analysis of strategic groups of competitors (according to M. Porter). In some cases, all the hotels operating and competing with each other in the industry can be grouped into one group according to certain strategic characteristics, but more often in several groups. Groups are united by hotels based on their competitive approaches, similar strategic positions and strategies used. The groups selected in this way were named the strategic groups of competitors.
A strategic group of competitors is a set of competing organizations in a certain industry that share similar features, including similar competition strategies, the same market positions, and other common features, for example, technologies used, prices or quality of products and services, sales channels , target audiences, service and other marketing elements.
Within these strategic groups, the most tangible intra-industry competition between hotels is conducted.
The above five forces of competition have different effects on the prospects and profitability of each strategic group. If the industry consists of one strategic group, then the model of the five forces of M. Porter is applicable to the analysis of competition in this industry as a whole.
Otherwise, it is necessary to use a five-force model for each strategic group. The same five forces will affect each hotel within each strategic group. Each group of competitors may differ from another one or more of the key characteristics of its competitive strategy.
As key characteristics, according to which the enterprises differ, including the hotels that are included in different strategic groups of competitors, can act:
• specialization (product specialization, targeting certain groups of consumers, scale of competition, etc.);
• Use in competition of certain brands (brands):
• choice of channels for promotion of goods and services, including the use of own and intermediary;
• the quality of the offered goods and services, including those calculated for certain groups of consumers;
• technological leadership, i.e. how intensively new technologies are used in the production of goods and services;
• The presence of vertical integration, i.e. acquisition or inclusion in the operating enterprise of other organizations entering the technological process of production at the stages before and after the technological process;
• the desire of the enterprise to achieve leadership but costs in the process of production and promotion of goods and services;
• customer service, including the service provided, an individual approach to customers, etc.
• Price policy, which corresponds to the chosen price strategy;
• the ratio between own and borrowed funds;
• attitude towards the parent organization and the influence of the latter on the current organization.
For analysis of competitive positions of hotels in the industry, a position map of strategic groups of competitors is used (positioning map).
The position map of strategic groups of competitors is constructed in a certain sequence:
• a set of the above characteristics is used;
• From this set, two most significant characteristics are selected, according to which the enterprises of the industry are different. There can be several such pairs;
• a graph is constructed in the coordinates of the selected characteristics pairs and points are placed on it reflecting the position of the industry organizations;
• closely located organizations on the chart are grouped together into a strategic group;
• The strategic group selected in this way is outlined by a circle whose diameter is equal to the market share of the organizations that are part of the circle.
Based on the use of the position card, a strategic group of competitors is determined, to which the particular hotel being analyzed is located.
Competitive strategic groups can be installed not only for hotels, but also for their products and services.
On the regional market there are hotels that compete among themselves and differ in the quality of the services provided, and their average price. The expert group determined the average quality of hotel services on a 100-point scale, and the average price of services - on a 1000-point scale. It is required to build a position map of strategic groups of competing hotels on the basis of the initial data given in Table. 3.4, and evaluate the position of the hotel "2".
Initial data for constructing a competitor's position card
& lt; & lt; 2
& lt; 2
Constructed from the original data specified in Table. 3.4, the position chart of the strategic groups of competitors is shown in Fig. 3.5.
Fig. 3.5. Competitive strategic group position card
Viewing a positional map shows that:
• The most important characteristic that affects the delineation of hotels is the average price of services;
• Two strategic groups of competitors clearly appeared. The first group includes hotels 2 & quot ;, & quot ;, X and is designed for consumers with low -
kimi incomes. The second group consists of four hotels /& quot ;, V **. About and that serve consumers with high incomes;
• the hotel occupies an intermediate position between the hotels X (has a slightly lower price) and Have (has a higher quality of service).
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