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A focused cost leadership strategy requires competing based on price to target a narrow
market. A firm that follows this strategy does not necessarily charge the lowest prices in the
industry. Instead, it charges low prices relative to other firms that compete within the target
market. Another important point is that the nature of the narrow target market varies across firms
that use a focused cost leadership strategy. In some cases, the target market is defined by
demographics.
In other cases, the target market is defined by the sales channel used to reach customers.
Performance Bicycle wanted to build up its customer base via the online channel. Mike Starkey ,
Vice President of Information Systems at Performance Bicycle, says: “We recognized that the
online channel had great potential to increase our reach far beyond our existing network of retail
stores – but to achieve that goal, we knew we had to offer more than just great products. If you
took a walk through our headquarters, the first thing that you’d notice is that all of our people are
extremely passionate about cycling – most of them even have bikes in their offices or cubicles.
We believed that our employees’ knowledge could help inspire and engage new customers, and
reinforce our reputation as the leading authority on cycling , but we are unsure of the best way to
share this knowledge.”
DIFFERENTIATION
Customer Service
“My family and I stayed here recently, we were constantly made welcome by the lovely staff
who always have a smile on their faces! They were very helpful and eager to assist us.”
“It was a very nice stay. The staff is super helpful, with 24/7 availability.”
“Great hotel great food excellent room 109 staff excellent very helpful.”
“Really nice family hotel. Quiet and very friendly staff.”
“The staffs are really friendly and kind and it is so nice to be in a family run hotel.”
These are some of the reviews of Nathalie Hotel’s customers from years and months ago.
Seeing these reviews and comments, even though these customers went there from different
times and seasons, they were all consistent with their remarks towards Nathalie Hotel’s staffs
and crews. There was no comment regarding their bad behavior, hence, making the employees
a big asset of the hotel. It is a big factor for hotels to have accommodating and welcoming
staffs since it works in the hospitality industry. Business people, if not all, are mostly stressed
and agitated because of handling too much workloads and such, as a hotel that these people
are staying at, having staffs that treat them nicely is a big factor that helps them with their
working antics and makes them consider staying more or even coming back to the hotel. As
Nathalie Hotel website says “The foundation stone of the hotels success is the attention to detail
and our love and personal care for both the hotel and its guests.”
COST LEADERSHIP
LOCATION
The location of Nathalie Hotel in a commercial area is a great opportunity since hotel
industry has traditionally focused on location as the most important critical success factor.
Despite the changes in the industry, location is still important. A hotel located on a little-used
highway is not likely to do very well, even if it offers superior service and amenities. However,
although location remains highly important, other factors matter. Nathalie Hotel should also
utilize their advantage for being able to choose a location near a beach.
GLOBAL OUTLOOK
Given the fact that Nathalie Hotel serves primarily business travellers, they need to be able to
compete on an international basis to be successful. Tourists deciding where to take their next
vacation can choose from destinations all over the world and can easily research the quality of
local hotels when making their selection. If a hotel tries to compete solely on price and location
while a nearby competitor also emphasizes creating a quality experience for the customer, then
visitors will go to the latter. Nathalie Hotel needs to be aware of what hotels all over the world
are doing to attract new customers and earn their loyalty.
QUALITY MANAGEMENT
Quality management is multifaceted and goes beyond the concept of customer service to
include additional factors such as employee satisfaction and involvement. A single random
interaction with a hotel employee can make the difference between a satisfied customer, an
impressed customer or a customer who goes online and writes a bad review about his hotel
experience. By concentrating on employee satisfaction as well as customer service, a hotel can
increase the likelihood that all its employees will provide excellent customer service as well.
Given the internet environment today, Nathalie Hotel must be more cautious in dealing with both
customer and employee since a single bad review online may rapidly spread and affect their
business roughly.
FLEXIBILITY
Flexibility is a key factor in quality management as well as being a critical success factor for
Nathalie Hotel. Customers can have completely different expectations of a hotel, so managers
need to be given the authority to make decisions to accommodate them when possible. A
manager hampered by an inflexible set of policies may be unable to fix a customer problem and
earn that customer's loyalty and good word of mouth in the future. A manager with the authority
to make exceptions when appropriate is in a much better position to turn a situation around and
earn a good reputation for customer service and high quality.
CUSTOMER SERVICE
Customer service is an integral part of the hotel experience. Clayton Barrows, author of
“Introduction to Management in the Hospitality Industry,” explains how the front-desk worker
serves as the gatekeeper of the hotel. The employee of the hotel will provide the customer’s first
and last impression. Thus, Nathalie hotel would achieve a critical success factor by ensuring the
staff is knowledgeable, courteous and capable of resolving any conflicts that arise. Providing
quality service also entails remembering the names and preferences of repeat visitors and giving
advice about attractions and surroundings.
ADVERTISING
Successful hotels target specific consumers and will cater their prices, amenities and
advertising strategies to this group. Nathalie hotel advertise as an ideal location for business
travelers by giving corporate discounts. This type of hotel also promotes itself as a venue for
business meetings, displaying its on-site conference rooms in magazines aimed at executives.
Robert D. Reid, author of “Hospitality and Marketing Management,” advises hotels to veer away
from generic descriptions such as “luxurious rooms” and “bargain price.” Instead, Reid
recommends commenting on the specifics of the décor or customer service.
COST CONTROL
Managing costs is a critical factor in a hotel’s success. Most hotels vary their rates
according to high and low seasons. Additionally, the establishment of a loyalty program enables
hotels to lower rates for repeat guests while charging different rates for others. One of the ways
hotels plan is through reservations programs that forecast demand beyond 90 days. Michael J.
O’Fallon, author of “Hotel Management and Operations,” explains how computer programs also
enable managers to identify the customers most willing to spend money and on which items.
From this knowledge, the manager can advertise directly to the person before arrival by offering
packages, upgrades and other incentives. Nathalie hotel’s success was also because of balancing
the cost of workers' wages, food and beverages, and electricity and maintenance with profits
deriving from booked rooms, amenities, gift shops and food and beverages.
PRODUCT DIFFERENTIATION
Nathalie Hotel thrives by offering guests a unique experience. This uniqueness may stem
from the location: A taste of Greece awaits you at the Nathalie Hotel. Traditional blue and white
island décor, blue skies, a sun drenched pool and a friendly, informal atmosphere all combine to
offer guests a wonderful stay. The foundation stone of the hotels success is the attention to detail and
our love and personal care for both the hotel and its guests. The Nathalie reaffirms that you are in the
heart of Greece and allows you to experience firsthand the uniqueness, which characterizes
Rhodes.