Tune Hotel and Hotel Istana segment their markets differently based on location, demographics, psychographics, and consumer benefits sought. Tune Hotel targets young adults with low incomes in Downtown KL, segmenting by price. It focuses on backpackers seeking affordable sleep and outdoor activities. Hotel Istana is in the Golden Triangle and targets adults and families with high incomes, segmenting by quality amenities and services for corporate and leisure travelers prioritizing luxury. While both are conveniently located, they pursue different market segments through varied room features and pricing.
Tune Hotel and Hotel Istana segment their markets differently based on location, demographics, psychographics, and consumer benefits sought. Tune Hotel targets young adults with low incomes in Downtown KL, segmenting by price. It focuses on backpackers seeking affordable sleep and outdoor activities. Hotel Istana is in the Golden Triangle and targets adults and families with high incomes, segmenting by quality amenities and services for corporate and leisure travelers prioritizing luxury. While both are conveniently located, they pursue different market segments through varied room features and pricing.
Tune Hotel and Hotel Istana segment their markets differently based on location, demographics, psychographics, and consumer benefits sought. Tune Hotel targets young adults with low incomes in Downtown KL, segmenting by price. It focuses on backpackers seeking affordable sleep and outdoor activities. Hotel Istana is in the Golden Triangle and targets adults and families with high incomes, segmenting by quality amenities and services for corporate and leisure travelers prioritizing luxury. While both are conveniently located, they pursue different market segments through varied room features and pricing.
Tune Hotel and Hotel Istana segment their markets differently based on location, demographics, psychographics, and consumer benefits sought. Tune Hotel targets young adults with low incomes in Downtown KL, segmenting by price. It focuses on backpackers seeking affordable sleep and outdoor activities. Hotel Istana is in the Golden Triangle and targets adults and families with high incomes, segmenting by quality amenities and services for corporate and leisure travelers prioritizing luxury. While both are conveniently located, they pursue different market segments through varied room features and pricing.
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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:
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
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