1.

0 Introduction And Company Background

1.1 Tune Hotel Background
Product

Tune Hotel (Double Room) / Budget

Hotel

Price

MYR93.97*

Place/Distribution

Jalan Tuanku Abdul Rahman, Kuala

Lumpur / Selective Distribution

Promotion

People

Advertising
Sales Promotion
Public Relation
Housekeeper (upon checkout)

Process

Online booking & payment/ Walk-in

Physical Evidence

Room size of 11sq meters with 5star

bed & power shower**

*Price vary according to seasons, promotion and advance booking period

**Add-on amenities will be charged

Table 1: Tune Hotel Marketing Mix

Tune Hotel is another brilliant idea from its co-founder Datuk Tony Fernandes, also the founder
and CEO of the low cost carrier (LCC) airline Air Asia when he addressed he need for
affordable and quality accommodation in Southeast Asia. Tune Hotel.com has opened its first
flagship no-frills hotel in Kuala Lumpur at Jalan Tuanku Abdul Rahman on 9 April 2007. The
no-frills concept hotel is the first in Asia. The hotel offered 275 limited service rooms. The
founder of the hotel believes there is still a big gap to be bridged when Tune Hotel set up its
chain of no-frills hotels in the country. Rapidly growing regional economies, coupled with the
exponential growth of LCCs, have generated an unprecedented volume of value-based
travelers. The hotels sector is crying out for clean, safe branded budget accommodation in
major cities. The Tune Hotels.Com brand will deliver that need in destinations across Asia.
Customers can be sure of a quality sleep and shower' experience, in a clean and safe
environment, and to choose the add-on facilities. It's a really exciting concept and deem in
looking forward to rolling it out across the region. Tune Hotels.Com claims to offer "5 Star Beds

at 1 Star Prices", with rooms charges start fromas low as RM 9.90 for customers who book in
advance through the website.

1.2 Hotel Istana Background

Product

Hotel Istana (Deluxe Room) / 5stars

Hotel

Price

MYR850.00

Place/Distribution

Jalan Raja Chulan, Kuala Lumpur /

Selective Distribution

Promotion

People

Advertising
Sales Promotion
Public Relation
24-hours Room Service

Process

Online booking & payment/ Walk-in

Physical Evidence

Room size of 38.1sqm with luxury

amenities

Table 2: Hotel Istana Marketing Mix

Hotel Istana, a 23-storey five-star international hotel located in the heart of the shopping and
commercial district of Kuala Lumpur. A stone's throw away from Bintang Walk, Twin Tower and
Suria Mall, KL Tower, and KLCC. The airport is only 60km or an hour's drive away. In Malaysian
language, "Istana" means palace and the Hotel Istana is famous for giving business travellers
the royal treatment. The Hotel is owned by Pernas-OUE and managed by Meritus Hotel &
Resorts commenced operations in August 1992.

2.0 Segmentation Comparison

Market segmentation is a process of breaking down a market population into few segments of
buyers with different needs and wants that might lead to different products and marketing mixes
(Kotler et al.,2005). Segmentation enable organization in enhancing profits by focusing on
certain group of potential consumers. Poor segmentation would lead to failure in launching new
products and overspending in an organization.

Segmenting Consumer Markets

Geographic

Demographics

Psychographics

Behavioural

Diagram 1: Segmentation Criteria

The market segmentation of Tune Hotel (Double Room) and Hotel Istana (Deluxe Room) is
being analyzed in this assessment. Both competing hotel is located in the same country which is
in Kuala Lumpur, Malaysia. In the determination of the market segmentation, there are few
elements which it is based, namely geographic, demographics, psychographics as well as
behavioural (Kotler et al.,2005).

2.1 Tune Hotel (Double Room)

Initially, Tune Hotel segmented its market geographically. This statement is supported by
viewing the location of the hotel which is in the heart of Kuala Lumpur, Downtown KL. It is a
capital city with the highest population of 1.556 million (Indexmundi,2014), with 13.3 million
tourist in year 2012 (KLMayorTourismAwards,2014). The location itself is very accessible and
convenient for the consumers as it is walking distance to the public transportation and also to
the tourist attractions (Tunehotels,2014).

On a demographics view, Tune Hotel is aiming on Generation Y with any genders who concern
on price despite the amenities and other services. This system is called generational marketing,
where cautious study has been directed towards sub segment keeping in mind the end goal to
comprehend their attributes (Solomon,2013). Viewing at its concept of providing "5 Star Beds at
1 Star Prices" (Tunegroup,2014), it can be concluded that Tune Hotel provides limited service
which focusing on offering excellent sleeping experience only and putting aside other amenities
such as breakfast meal, towel, toiletries, and television in the double room. All these additional
amenities is provided upon request and will have additional charge (Tunehotels,2014).
Consequently, it identifies its market segment to the lower income group with the low pricing
strategy of MYR93.97 per night (depending on season and major festivals). This is cheap unlike
other hotels which offers higher price but with better services.
Moreover, Tune Hotel broaden its segmentation on psychographics factor on the lifestyle and
personality variable. It breakdowns the segment to consumers who desires active lifestyle such
backpackers as their main concern is the sleeping experience rather than other amenities and
services (Tunehotels,2014). They accommodate the room only to sleep and prefer outdoor
activities.
Additionally, it also segmented the market on behavioural segmentation which emphasis on the
benefit sought. As for backpackers, they put least expectations and demand on service and
infrastructure and keen in participating in outdoor activities (Becken,2003). They are more
interested in economy value, the cheaper the better so that they can spend more on their
physical activities rather than spending more on high quality and service type of
accommodation. In a nutshell, that is exactly what the Tune Hotel (Double Room) is offering to
its consumers.

2.2 Hotel Istana (Deluxe Room)

Hotel Istana emphasis on geographic segmentation as they are located in the strategic Kuala
Lumpur Golden Triangle area. This area comprises major streets with numbers of famous and
high end shopping malls, hotels and entertainment districts (Kuala-Lumpur.ws,2014). Its
location is one of the attractive feature of the hotel that attracts the consumers in experiencing
stays in Hotel Istana. It has high accessibility to the public transportation and walking distance to
Malaysia iconic attractions, Kuala Lumpur Convention Centre and famous Petronas Twin
Towers (Hotelistana,2014).
Solomon argues that demographics are measurable characteristics such as gender and age
(2013:224). In the second place, Hotel Istana is aiming on adults and family for this particular
room. Align with its slogan of Redefining Refinement (Hotelistana,2014), the amenities and
facilities provides in the Hotel Istana (Deluxe Room) is at the highest level. With the price of
MYR850.00 per night (depending on season and major festivals), the family could enjoy the
facilities such as variety of television channels (including business and cartoons), free breakfast
meal, luxury toiletries, wifi and many more (Hotelistana,2014). Under those circumstances, the
hotel segmented the market to high income consumers.
Subsequently, Hotel Istana also segmented its consumer market according to psychographics
criteria which involves social class and lifestyle. With the spacious size of 38.1sqm per room, it
is ideal for corporate and leisure travelers (Hotelistana,2014). Indeed, this type of consumers
are with high sociability and class, looking at its high price and luxury in-room amenities.
On a behavioural view, Hotel Istana is underlining on the benefit sought variable for its
segmentation. According to Becken, leisure travelers has high tendency and willingness on
spending bigger amount of money on accommodation (2003). This type of consumers concern
on the quality and services provided by the hotel in the deluxe room rather than the price

incurred. By all means, the consumers of this room will apparently expected the benefit of
gaining high and luxury amenities and services without concerning on the price for each room.

2.3 Critical Comparison

Demographic

Psychographic

(Age & Family Life (Social

Class

Behaviour
& (Benefit Sought)

Cycle)

Lifestyle)

Tune Hotel

Young adults

Active

(Double Room)

Low income

Backpackers

Hotel Istana

Adults & Family

High sociability

(Deluxe Room)

High income

Corporate & Leisure Services

Economy value

Quality

travelers

Table 3: Tune Hotel versus Hotel Istana

In a like manner, both rooms are located in strategic areas in the Kuala Lumpur capital with high
accessibility and very convenient especially for consumers that are planning to use public
transport around the city. Despite this favourable feature, it however has different measures for
both rooms in terms of the demographics, behavioural and psychographics segmentation.
Demographically, Tune Hotel segmented their market to young adults that with low income. This
is supported by low price which is MYR93.97 per night compared to other hotel with higher price
(Refer Appendix 7.1). Unlike Hotel Istana, its high price of MYR850.00 per night (Refer
Appendix 7.2), drive them to segment its consumer market to adults and family with high
income. This is based on the high purchasing power of this group for the particular room. Next,
Tune Hotel divides its target to backpackers with active lifestyle. In contrast with Hotel Istana
that aiming on corporate and leisure travelers who has high sociability. These criteria are
segmented under psychographic factor. Furthermore, consumers always demand for products
and services that satisfy their need and want. This initiate both entities to segment its services
according to the customers behaviour. Tune Hotel offers an economical value to its consumer
as it promise a "5 Star Beds at 1 Star Prices" (Tunehotels,2014). On the contrary for the Hotel
Istana, its slogan of Redefining Refinement (Hotelistana,2014) support the high quality and
services provided to its consumers.

3.0 Targeting Comparison

Targeting Market Strategy

Undifferentiated

Differentiated

Concentrated

Customised

Diagram 2: Targeting Strategy

Targeting is the second step in the target market process where it evaluates and select the
market segment that have the capability in enhancing profits to the business (Solomon,2013).
This process can be done using based on these strategies which are undifferentiated,
differentiated, concentrated and customized marketing strategy. Factors that may be consider in
selecting strategy are the availability of resources, consumers demand, market size, market
share, competition and the economic scale ( Dibb et al.,2006).

3.1 Tune Hotel (Double Room)

Customized?

3.2 Hotel Istana (Deluxe Room)

Hotel Istana adopted undifferentiated targeting strategy for its consumers that uses only one
marketing mix for all (Tunehotels,2014). This proved that the market is homogenous

3.3 Critical Comparison

4.0 Positioning Comparison

4.1 Tune Hotel (Double Room)

4.2 Hotel Istana (Deluxe Room)

4.3 Critical Comparison

5.0 Summary

6.0 Reference List

Books
Dibb, S., Simkin, L. and M. pride, W. (2006). Marketing. (Fifth ed.). Boston: Houghton Mifflin.

Kotler, P., Wong, V., Saunders, J. and Armstrong, G. (2005). Principle of Marketing. (Fourth
ed.).
Essex, England: Pearson Education Limited.

Solomon, M. (2013). Marketing : Real people, real decisions (Second ed.). Harlow, England:
Pearson.

Report
Becken, S. (2003). [online] Available at:
http://www.landcareresearch.co.nz/publications/researchpubs/becken_integrated_appro
ach.pdf[Accessed 10 Dec. 2014].

Websites
Hotelistana.com.my, (2014). Kuala Lumpur Hotel: Hotel Istana Kuala Lumpur Premier Business

Hotel In Kuala Lumpur - About Us. [online] Available at:

http://www.hotelistana.com.my/aboutus [Accessed 11 Dec. 2014].

Indexmundi.com, (2014). Malaysia Demographics Profile 2014. [online] Available at:

http://www.indexmundi.com/malaysia/demographics_profile.html [Accessed 09 Dec.
2014].

Klmayortourismawards.com, (2014). Kuala Lumpur Mayor's Tourism Awards 2014. [online]

Available at: http://2014.klmayortourismawards.com/kuala-lumpur.php [Accessed 09
Dec.
2014].

Tunegroup.com, (2014). Tune Group. [online] Available at: http://www.tunegroup.com/

[Accessed
09 Dec. 2014].

Tunehotels.com, (2014). Kuala Lumpur Hotels, Budget Hotel in KL - Tune Hotels. [online]
Available at: http://www.tunehotels.com/my/en/our-hotels/downtown-kl/ [Accessed 09
Dec. 2014].

Magazines (Online)
kuala-lumpur.ws, (2014). Kuala Lumpur Golden Triangle Guide. [online] Available at:
http://www.kuala-lumpur.ws/klareas/golden.htm [Accessed 11 Dec. 2014].

7.0 Appendix
7.1 Tune Hotel (Double Room) price per night

7.2 Hotel Istana (Deluxe Room) price per night