2201 Strategic Marketing | CIM Membership No: 14338551

1.0 COMPANY BACKGROUND

1.1 Pegasus Reef Beach Hotel
Pegasus Reef Beach Hotel (henceforth termed as Pegasus) is a member of the Pegasus Hotels of
Ceylon PLC- a public quoted hotel chain primarily listed in the Colombo Stock Exchange (CSE)
and a subsidiary of the leading local diversified conglomerate Carson Cumberbatch PLC. Pegasus
was given birth in the year of 1971, being the first prime star class hotel in Sri Lanka, enveloped
with a European ambience. Pegasus’s vision of setting the trends of hospitality and governance that will make an impact,
nationwide is well supported by Sri Lanka’s rising prominence of the tourism sector, coupled with increased economic activity
in the country. (Source: Pegasus Annual Report 2014/2015) Corporate

Managing Director
Pegasus Hotels of
Management

Ceylon PLC
1.2 Organizational structure [General Manager]
Pegasus operates as a functional organizational structure. The functional areas are categorized
into two key control areas (Refer Figure 01): 1. The General Manager is responsible for the Hotel Management
management of Sales/Marketing, Finance, Human Resources and IT/Communications; while [Resident Manager ]
2. Resident Manager is responsible for the Food/Beverage, Housekeeping, Engineering, Figure 01: Org. structure
Security and Coordination/Control of the hotel. Source: Org. internal source
1.3 Organizational size and growth With 181 permanent cadre employees, Pegasus spans over 11acres with
Figure 02
600
140 guest rooms and 6 conference halls.
Turnover (LKR

Despite the revenue loss in 2014 due to the slump in crude oil and high
millions)

400
operating costs, Pegasus has managed to gain a strong 15% gross profit
200 growth alongside a 11% revenue growth in 2015 (Figure02). And the
0 market capitalization of the company stands at LKR 1,246mn as opposed
2011 2012 2013 2014 2015 to the drastic decreases in 2014 and 2013 (up to 89mn). Further coupled
Annual Turnover Gross Profit Market Capitalization with the steady growth, the earnings per share show an increase
(Figure03). However, compared to the historical figures, Pegasus seems
to be struggling with the occupancy rate at
Earnings (LKR)

100 6
49% in 2015 against 59% couple of years
Rate %

4
50 ago (Figure04). Nevertheless, Pegasus has
2
shown promising growth figures in the
0 0 recent months.
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 (Source: Annual Reports from 2011-2015)
Figure 03 Figure 04
1.4 Product offering Table 01 Source: http://www.pegasusreefhotel.com
Accommodation  106-Standard rooms, 21- Deluxe rooms, 8- Suites, 5-Honeymoon Suites.
MICE  Meetings, Incentives, Conference, Other Events (6 indoor/outdoor halls to select from)
Services  Laundry service, Safety lockers, Foreign currency encashment, Travel counter
1.5 Customer base 1.6 Competitors- 4star Hotels/ Resorts
Pegasus’s both local and foreign customers are grouped into cluster
based on the purpose of their stay and the expected number of packs/ Amaaya Resorts
5% 10%
on persons. PLC
Process of segmenting the guests: Table 02 John Keels
16%
Guest Type  Package  No. of packs Holdings PLC
32%
Local/ Foreign Leisure/ Business Individual/ Group Chaaya Resorts
and Spas
Customer segmentation:
Table 03 Aitken Spence
Family Professional MICE Holdings PLC
5% 21%
For the perfect getaway For relaxation to the For business services Jetwing Hotels
soul and MICE 11%

Other
1.7 Corporate social responsibility (CSR) Figure 05: Market share of 4-star
Furthering their commitment to the society they operate in, Carson hospitality competitors of Sri Lanka Pegasus Reef
Cumberbatch Hotels have constructed a brand new building to house Source: Sri Lanka Tourist Board Beach Hotel
the Sunday school for the children of Agbopura in Polonnaruwa area, Pegasus is a small player among the SLTDA
which could accommodate approximately 200 children. This nominated 4Star Hotels sector. The category is
initiative was taken last year after seeing the derelict state of the dominated by large scale- multi sector operators such
building that was used by the children of the community close to
as Jetwing Hotels, Aitken Spence and JKH Holdings,
Pegasus brother-hotel in Giritale.
who also compete in the 5-Star category. Page | 1

The marketing planning process for Pegasus is carried out using the SOSTAC- Situational Analysis, Objectives, Strategy,
Tactics, Action and Control framework.
2.0 SITUATIONAL ANALYSIS
2.1 SWOT analysis
External elements
External opportunities
O1 The increasing demands for MICE
activities.
O2 Emergence of a technologically
advanced, digitally driven customer
base.
O3 Growing GDP and disposable income
of customers coupled with the end of
the ethnic conflict in the country
indicates growing numbers of guests.
O4 Strategic objectives of SLTDA to
increase the tourist arrivals by 2.5Mn
in 2017.
O5 Setting up a ‘One Stop Shop’ and ease
regulations on infrastructure
development by SLTDA for tourism
related investment projects.
External threats
T1 Introduction of ‘minimum rates’ for
hotels in the capital city.
T2 The high rivalry among large scale-
multi sector operators in the 4Star
hotel category.
T3 Upcoming tourism development
zones in Colombo, Kalpitiya, Nilaweli
and Hambanthota.
T4 Lack of a proper mechanism to
dispose electronic garbage island-
wide.
2200 Strategic Marketing | CIM Membership No: 14338551
Internal elements
Organizational strengths
S1 Strong brand name as a leading 4-Star Hotel W1
in the northern coastal region.
S2 The location of the hotel which easily W2
facilitates/ satisfies four diversified
customer segments.
S3 Strong financial backing from the group-
Carson Cumberbach.
S4 Wide formation of product offering.
S5 The large number of accommodation types/
rooms compared to other 4star competitors.
S6 Flat functional organizational structure
which facilitates high levels of employee W5
empowerment.
Strategic options
S-O Strategy
S1-O1 Strong brand identity to attract the
increasing clientele for MICE
S2,S5- The convenient and unique location and
O3,O4 large number of accommodation types to
facilitate the growing number of
diversified guest groups
S4-O2 The wide range of products to be
augmented to capture and cater to the
growing digitally driven customer.
S3-O5 Exploiting the eased regulations on
building infrastructure with the strong
financial backing from the group.
S-T Strategy
S4,S5- Multiple accommodation types and wide
T1 formation of product offering to tackle
minimum rates in city hotels.
S6-T2 Flat and empowered organizational
structure to brainstorm and formulate
strategies to overcome the severe
industry rivalry.
S2- Development of proper mechanism to
T3,T4 preserve the ecosystem in order to gain
advantage from the unique location and
compete with the upcoming tourist zones
Table 04
Organizational weaknesses
Poor financial stability and interrupted
profit chain.
The lower degree of usage of online
communication tools.
W3 Lack of innovative/ creative services and
offerings for the growing diversified
customer base.
W4 Inadequate initiatives to provide training
and development for employees of all
levels on new and upcoming tourism
trends/ service activities.
High operating costs than competitors.
W-O Strategy
W1-T1 MICE event promotion to be increased
in order to maintain uninterrupted
revenue flow.
W2-T2 Technologically advanced growing
clientele will raise demand for
increased and improved digital
presence.
W1,W3 Increase innovation and exploit creative
-O4 routes for value addition at the face of
growing tourist arrivals and improve
profitability.
W5-O5 High operating costs to be managed
through feasible infrastructure
development.
W-T Strategy
W1-T1 Profit chain to be maintained via
innovative and varied product offerings
that go against the minimum rate offers
in the city.
W2,W4 Improve the online communication,
, trained staff to attain competitive
-T2 advantage at severe competition.
Introduce innovative service(s) to
W3-T3 create blue oceans against the rising
tourist zones.

2.2 PEST Analysis (External environmental analysis){ H-High M- Medium L-Low O- Opportunity T- Threat} Table 05
Factors H/M/L O/T
1.1 Introduction of ‘minimum rates’ for hotels in the capital city: discourage the visitors to seek leisure options in M T
Political/

outstation locations.
Legal

1.2 Setting up a ‘One Stop Shop’ and ease regulations on infrastructure development: considerably reduces the time M-H O
1

spent by investors to obtain necessary approvals and the industry can anticipates growing numbers of foreign guests and
investors
2.1Startegic objectives of SLTDA to increase the tourist arrivals by 2.5Mn in 2017: attracting USD 3,000 Mn as Foreign M O
Economic

Direct Investment (FDI) and increase tourism related job market opens access to a larger capital and human capital
resource pool.
2

2.2 Introduction of a conductive taxation strategy for tourism: Profit subject to a maximum of only 12% tax. L-M O
2.3 Upcoming tourism development zones in Colombo, Kalpitiya, Nilaweli and Hambanthota M-H T
3.2 Clear connectivity and internet facilities being a critical success factor in the tourism industry: the internet and free H O
Techno
logical

data facilities as threshold competencies today.

3

3.3 Online and mobile penetration: the increase in the multiple device usage per person across the globe signals hints the M-H O
hotel on the multiple touch points to interact/ engage with an individual.
Ecological

4.2 The expired/ damaged digital garbage which unfortunately requires a strong and sustainable mechanism to forward M-H T
4 Social/

to recycling or dispose on site, without harming the natural ecosystem – the key vantage point of SL’s tourism industry.
4.4 The increasing demand for MICE activities: hotels moving beyond from the mere ‘holiday’ notion to H O
corporate/business engagements.

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 2200 Strategic Marketing | CIM Membership No: 14338551
2.3Porter’s Five Force Analysis (Source: Porter, 1971) {Rate: 5= Highest impact 1- Lowest impact} Table 06
Force Discussion Rate
Bargaining power of -High number of buyers relative to sellers, and larger number of product differentiation enables low switching costs for 5
customers the customer.
-Demand dependent on price, market offer and quality.
Bargaining power of -High availability of substitute inputs. 3
suppliers -Medium threat of supplier forward integration.
-Medium switching cost for hotels when switching suppliers.
Threat of new -High entry barriers (license and accreditations) / High initial capital, infrastructure and operating costs, low access to 3
entrants distribution channels discourages new entrants.
-Only large scale mature firms enjoy economies of scale in the long run.
Threat of substitutes -Relative price differentiations and level of expected quality determines the demand. Hence, very low switching costs 4
for buyer.
Industry rivalry -High number of competitors with diversified product offerings and unbalanced sizes in operations. 5
- High industry growth rate encourages innovation and gaining competitive advantage through exploiting strategic
stakes.
-Low fixed costs and high variable costs. -Medium-High exit barriers.
The SL 4Star hotel industry appears to be highly competitive with a diversified range of products and services offered by a
large number of players in varied sizes. Pegasus should proactively engage in Innovating and developing augmented features
as well as focus on attaining competitive advantage over the rest in order to distinguish their offering.
2.4 Competitor capability analysis (Source: Piercy et al, 2008) {2= Highest -2= Lowest} Table 07
Critical success factor Pegasus=3 Jetwing=17 AitkenSpence=15
Location -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Local/ Global outlook -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Quality management -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Customer profiling -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Efficiency of staff -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Financial position -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Investment capability -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Value added services -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Recreational activities -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
Innovation -2 -1 0 1 2 -2 -1 0 1 2 -2 -1 0 1 2
In the SL 4Star hotel industry, Pegasus is still a small player compared to large scale mature operations like Jetwing and
AikenSpence which has multiple four star set ups. Strong group backing in terms of finance and investments and innovation
led efficiency appears to be key success factors of the leaders. Pegasus’s lack of innovation and recreational activities coupled
with inefficiency in operations has made them a weak player.
2.5 Cultural web (Johnson et al, 1992) Table 8
Factor Discussion
The Stories Pegasus Reef Beach Hotel was given birth in the golden year of 1971, marking a historical entrance to the hospitality industry
been the first prime star class hotel in Sri Lanka, enveloped with a European ambience. Mr. J.L.M. Fernando was the 1st
chairman of Pegasus Reef who steered this calming edifice through his foresight and industrial expertise, to the peak of success
creating positive Tsunami waves in the hospitality industry.
Rituals and routines The support services work on an 8.30am-6.00pm work schedule while the rest or the staff work on a 10 hour shifts. Employee
of the month is selected from the services staff and regarded as an encouragement; while new ideas and innovative methods
which will enhance the operations are always welcome by the management.
Symbols Each employee is provided a uniform, a complete training on how their outlook/appearance should be.
Power structures The decision making process is done by the Ex-co board at Carsons Cumberbatch- Pegasus’s parent company, along with the
Managing director, resident manager and the general manager.
Organization Pegasus operates as a functional organizational structure. The functional areas are categorized into two key control areas: 1.
structure The General Manager is responsible for the management of Sales/Marketing, Finance, Human Resources and
IT/Communications; while 2. Resident Manager is responsible for the Food/Beverage, Housekeeping, Engineering, Security
and Coordination/Control of the hotel.
Control systems Centralized control systems in the two operating areas are synced. The apex of the organization stands as the main link between
the group and the hotel as well as on the divisional operations.
The paradigm Setting the trends of hospitality and governance that will make an impact, nationwide; with a set of values which put the
customer first.
2.6 USP’s of Pegasus
 A 4 star leisure hotel with a corporate reputation of 45 years of superior customer care.
 Unique location in-between two natural waterways- the lagoon and the Indian Ocean.
 Young and energetic workforce with expertise on hospitality management.
 Exclusive product portfolio to comfort the mind, body and soul leisure customer with grander value.
 State of the art infrastructure facilities for any MICE activity.

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 2200 Strategic Marketing | CIM Membership No: 14338551
2.6 Stakeholder analysis- Power/ interest matrix 2.7 Customer analysis Table 10
(Source: Eden and Ackerman, 1998) Segment Family Professional MICE
Table 09
Age 10-50 years 30 years and above 25-50 years
Interest USD $ 200 and USD $ 150 and N/A
Capacity to
High Low spend (daily) above above
Key players Keep satisfied Social class Upper and middle Upper and middle Upper and middle-
High

-Shareholders - Principal group income income upper income

-Investors -SLTDA and Lifestyle Adventurers/ Professionals and Business events
hunters for new retired community
Power

-Customers Government
opportunities
-Competitors departments.
% of value 30% 10% 25%
Keep informed Minimal effort derived
-Staff -Pressure groups Geographical Domestic- Urban, Domestic- Domestic- Urban,
-Suppliers -Media presence Sub urban Urban,Sub urban Sub urban
Low

-Public International- International-

Urban Urban
Customers are a key player to any organization in
Digital Mainstream
Mainstream, and Mainstream and
the hotel industry. Pegasus’s customer base is persona Digital Nomads
Nomads and Chameleon
segmented into four categories. The highest value to Wannabes
the organization is brought by the ‘Mind’ group who purely seek a perfect getaway; while the ‘Professionals’ expecting good
returns on MICE activities are emerging as strong contributors of value.
2.8 Porter’s value chain (Source: Porter, 1985) Table 11
Firm infrastructure- 4 buildings housing 106-Standard rooms, 21- Deluxe rooms, 8- Suites, 5-Honeymoon
Suites and 6 indoor/outdoor halls to select from; two restaurants, 4 warehouses, officers and staff quarters.
Infrastructure management is done through a flat structure let by Two general Managers.
Supporting activities

HRM- With 181 permanent cadre employees belonging to 9 functional areas per forms their tasks under the organizations
vision. The General Manager is responsible for the management of Sales/Marketing, Finance, Human Resources and
IT/Communications; while the Resident Manager is responsible for the Food/Beverage, Housekeeping, Engineering,
Security and Coordination/Control of the hotel.
Technology- Minimum level of technology used for marketing, promotions and customer engagement.
Financial software packages, reservation system and customer databases are key technological platforms used. Pegasus’s
website appears to be the most active and effective online operating system while a very few social media platforms add significant
value in customer engagement and delivery of information.
Procurement- Purchasing of food and beverages, equipment, utensils and utilities, laundry and other necessities are ordered and
supplied on a monthly basis as per the requirement of finance and the resident manager.
Inbound logistics Operations Outbound logistics Sales/Marketing Services
The four warehouses are Quality is considered as Service delivery is done via A lower level of marketing CRM is done through
being used to store highest priority when the customer service activities are conducted the data gathered at
Primary activities

supplies of food and serving customers on their executives and the front through the Pegasus guests’ check-out.
beverages, equipment, requirements. Since office management. website and social media This is used
utensils and utilities, Pegasus welcomes both sites such as Facebook and to ‘keep-in-
laundry and other local and foreign guests, Instagram. However, the touch’ with
necessities. the hotel assigns customer hotel is focusing their the recent customers.
service executives for each efforts on improving the No other services
guest group to help meet sales of MICE activities are available.
their needs efficiently and due to its high demand
effectively. recently.
2.9 Resources, capabilities and core competencies
2.9.1 Types of marketing assets (Source: Thompson et al, 2013) Table 12
Physical resources -Pegasus spans over 11acres with 140 guest rooms: 106-Standard rooms, 21- Deluxe rooms, 8- Suites, 5-Honeymoon Suites.
Tangible resources

-6 fully equipped conference halls to facilitate MICE activities.

-In-house counters for laundry service, Safety lockers, Foreign currency encashment and travel info.
Financial - Strong financial backing from the group- leading diversified conglomerate Carson Cumberbach.
resources - Promising profit growth figures- strong 15% gross profit growth alongside 11% revenue growth in 2015.
-Investments in improving adventure based activities and analytics are over LKR 2.5 million.
Organizational -Over 5000 frequent visitors and solid portfolio of corporate relationships belonging to the three market segments.
resources -Location: a) closer to the national airport b) in between the Indian ocean and a lagoon which encourages watersports.
Human assets and -Pegasus houses 181 permanent cadre employees and 32 other employees on contract basis.
intellectual capital -The Directors, senior management and head of divisions possess over 20years of industrial experience.
Intangible resources

-Young and internationally qualified marketing team.

- Flat functional organizational structure facilitates high levels of employee empowerment.
Brands, image, -Strong brand image, cooperate logo and unique brand identity.
reputational assets - Proud history of the entrance to the hospitality industry been the first prime star class hotel in Sri Lanka, enveloped with
and relationships a European ambience.
Organizational -Monetary terms: monthly salary, bonuses twice a year and target based incentive schemes for all staff.
culture and -Non-monetary terms: inbound and outbound training sessions, flexible work shifts, transport and meals provided freely,
incentive systems high levels of employee empowerment.

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 2200 Strategic Marketing | CIM Membership No: 14338551
2.9.2 Resource based view of strategy 2.9.3 Resources & capability portfolio matrix
(Source: Hamel and Prahalad, 1990) Table 13 (Source: Grant, 2010 and Hooley et al, 2012) Table 14
Easy to imitate Difficult to imitate Resource strength
Threshold resources Unique resources Superior Inferior
Resources

-Guest rooms, conference - Brand image, cooperate logo

Achille’s heels

Degree of value creation

halls and other services. and unique brand identity. Crown jewels

High
- Trusted reputation of the -Brand name and heritage -Wide range of product
mother company.
-Unique location segments for
-Supplier partnerships.
-Reputation for MICE accommodation.
Threshold competencies Core competencies
Competencies

-Empowered and -Fully equipped facilities for activities

knowledgeable workforce of MICE activities and events.
181. -Potentially profitable and Black holes Sleepers
- Young and internationally ecologically enriched location. -Supplier partnerships -Digital platform and

Low
qualified marketing team - Empowered employees communication channels
2.9.4 Brand pyramid (Source: Keller, 1993) Table 15
Level Position Application
01 Who are you? Salience Segmenting the 4-star hospitality market into three customer groups based on their perceived
(Identity) requirements: family- adventurers/ hunters for new opportunities, professional- professionals and
retired community and MICE- Business events.
02 What are you? Performance Accommodation (room) types, offers and rates, facilities for MICE, in-house services, online
(Meaning) reservations, easy access to the unique location, value added services, sports and recreational
activities.
Imagery Proud heritage of the group, profiles of experienced members of the strategic level, loyal customer
groups who visit Pegasus periodically, popularity as a hot-spot for MICE activities.
03 What about you? Judgment BOI approved ISO quality awards for 4-star service, expert marketing consultancy, young
(Response) operational level staff with varied caliber.
Feelings Most popular for an ‘all-in-one leisure destination’ and ‘perfect fit for your MICE needs’.
Continuing CSR activities to up bring the primary education levels in the North Central province.
04 What about you and me? Resonance Repeat visits from customer groups during the seasonal periods, strong relationships with suppliers
(Relationship) and corporate world to attract business opportunities, healthy word of mouth on the service quality
and product offerings which are in par with the city hotels.
2.10 Competitive advantage diamond (Source: Diasz, 2012) Table 16
Creating entry barriers Advantages from the physical location- surrounded by two waterways which encourages adventure water sports.
Fit with the environment SLTDA’a eased regulations on infrastructure development assist expansion of services, and rapid technology growth to
capture the rising tech-savvy clients and build loyalty.
Disproportionate profits The identification of new customer groups and introduction of new MICE facilities to gain high market returns
Core competencies Fully equipped facilities for MICE activities and events, potentially profitable and ecologically enriched location and strong
focus on diversified leisure packages.
Leverage Point of differentiation- Pegasus is a 4star hospitality partner which equally caters leisure and business needs all at once.
Invest Strong financial backing from the mother organization.
Sustain Brand name and heritage, unique location and reputation for MICE activities.
2.11 Justified conclusion
According to the above analysis, it is evident that Pegasus operates in a highly competitive and intensely dynamic market
environment which focuses on 4-star hospitality and tourism facilitation. It appears to be a one of the smallest players in the
industry who has the potential to maximize market gains through exploiting its resources. Apart from the rapid waves of change
in the external environment, Pegasus is impacted from the higher economies of scale of rivals city hotels, disordered USP and
ill-focus on clearly differentiated key customer segments.
Form a resource utilization perspective, it is obvious that Pegasus’s degree of exploitation of its unique and vibrant resource
pool both: natural and organizational is at lower level. The crown jewels of Pegasus are its reputed history, brand name and its
unique location which opens gateways to innovative market offerings and expanded services; is underutilized and lacks proper
strategic plan. The three market segments can be further augmented and strengthened with focused services, and perhaps
expanded in the hope to capture the young and dynamic customer clusters. Additionally, the recognition of Pegasus as a most
preferred place for MICE activities appears to be driving promising revenue to the organization’s current course. A fact
noteworthy is that the sleeping digital platform and communication channels give the negative impression that Pegasus isn’t
innovative and current on its market offerings. Furthermore, in essence from the above analysis, as per the VRIN model for
inimitability of strategic capabilities (Scholes and Whittington, 2008), Pegasus’s unique location and positive image on MICE
activities can be used as key vantage points.
Therefore, in conclusion, I must note that, Pegasus’s current degree of identifying resource - capabilities - core competencies
and strategically exploiting for futuristic gains is at a moderate.

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 2200 Strategic Marketing | CIM Membership No: 14338551
3.0 OBJECTIVES AND GOALS
3.1 Components of mission (Hooley, Piercy and Nicoulaud, 2008) Table 17
Vision (Strategic intent) To become a leading premium hospitality provider in Sri Lanka
Mission We want to set the trends of hospitality and governance that will make an impact, nationwide as a premium brand
which understands our customers.
Company values Distinctive competencies Competitive positioning Market definition
Pegasus believes in premium Capacity to cater to multi segment Unique positioning: For diversified customer groups who seek
hospitality, integrity of service and client groups and strong devotion “premium 4-star leisure to the ‘mind’, ‘body’ and ‘soul’; and
partnership with people aiming at to facilitate MICE activities. hospitality” business cluster who seek reputed service
their vision. excellence and premium hospitality.
3.2 The Ashridge mission model (Source: Yeung and Campbell, 1991) Table 18
Purpose To satisfy the mind, body and soul of the leisure customer and satisfy the business client with state-of-the-art MICE facilities.
Strategy To be the market leader of the 4star hotel sector through diversified product offerings for leisure and business through maximum
utilization of tangible and intangible resource pools
Values Premium hospitality, integrity of service and partnership with valued customers
Behavior standards Performance-partnership-integrity-innovation
3.2 Review of corporate objectives & proposed marketing objectives to be achieved by 2019 Table 19
Corporate objectives Marketing objectives
To become one of the top four 4-star hospitality partners in the -Achieve a market share of 15% and be rated as one of the top four 4-star
island with multi segment catering of premium hospitality by: hospitality providers in the island
-Achieving 30% revenue growth coupled with 20% increase in -Increase online sales by 50%
EPS. -Achieve 80% occupancy rate through the three key leisure segments
-Achieving 23% Return On Resources (ROR) -Improve MICE demand by 50%
-Doubling operating profits -Double the online communication channels
-Use big data analytics to capture and forecast 80% of demand trends.
3.3 Critical Success Factor (CSF) evaluation {H-High M- Medium L-Low} Table 20
CSF Rating CSF Rating CSF Rating CSF Rating
Geographic location H Customer profiling H Investment capability L-M Innovation
Brand name and heritage Efficiency of staff/ Customer and
M M L-M technology H
teamwork satisfaction/loyalty
Service quality M Financial position L Recreational activities M usage
3.4 Market segmentation and targeting Secondary target Table 21
Mind Body Soul Professional
Table 18
Primary target For the perfect getaway For explorers and For relaxation to the For business services
challengers soul
1.1 Domestic/ Domestic and Domestic and Domestic and Domestic
Geographi

International International International International

1

1.2 Population density Domestic- Urban- Sub Domestic- Urban- Sub Domestic- Urban- Sub Domestic- Urban- Sub
urban urban urban urban
International- Urban International- Urban International- Urban
2.1 Age Below 55 years 10-50 years 30 years and above 25-50 years
Demograp

2.3 Level of Spending USD $ 150 and above USD $ 200 and above USD $ 150 and above N/A
hic

(USD per day)

2

2.4 Social class Upper and middle Upper and middle income Upper and middle Upper and middle-upper
income income income
3.1 Lifestyle Busy lifestyle/ Family Adventurers/ hunters for Busy lifestyle/ on-the-go Business professionals
commitments new opportunities professionals/ retired
3 Psycho
4.1 Frequency of usage Once in 6 months Once in 3-4 months Once in 6-8 months On business requirement
Behav
ioral

4.2 % of value derived 40% 30% 10% 25%

4

4.3 Price sensitivity High Low Medium Medium

3.5 Targeting
The primary target market of Pegasus which at delivering the stated objectives is the ‘Mind’ group who seeks a perfect get
away from their busy lifestyles. However, a secondary target is also defined to project.
3.6 Aspired positioning
Pegasus aspires to be a premium hospitality brand in Price Amaaya Chaaya
the 4-star hotel market through delivering high High Jetwing
service excellence. Hence positioning is performed Aitken JKH
Spence
by taking into account the service quality of the
product offering and price. Analina
Currently, Pegasus remain as a 4 Star hotel which Anantaya
delivers moderate service quality for a relatively low Low Service quality
price in the market. At the completion of three years, Pegasus High
Pegasus aims at (Figure 06) being among the leading
players as a hotel delivering high service quality for Page | 6
Figure 06
a price which could be argued as a ‘value for money’
service.
 2200 Strategic Marketing | CIM Membership No: 14338551

4.0 STRATEGIC OPTIONS 4.2 The triple bottom line

4.1 Generic business strategy (Source: Elkington, 1995)
(Source: Porter, 1985) Pegasus currently follows a
Table 22 As a firm which operates based on people and
Competitive advantage cost leadership strategy
ecosystems, preserving these two factors for
Low cost Differentiation with its low cost packages. optimum market gains is essential. Hence the
However, since its objective
Broad

newly product categories;

Competitive scope

Cost
Differentiation is to become a ‘premium
leadership increase job opportunities, empowerment and
hospitality partner’ it should
engagement for the people; engagement and
project focused segments
exploration of the eco-system and stresses on
Differentiation with reasonable packages.
Narrow

Cost focus reserving it as it is a key resource; and encourages

focus
Therefore, Pegasus should
the locals to engage to introduce the tourists to
follow the focused
‘Sri Lankan-ness’ with a sense of pride.
4.3 Growth Strategy- Ansoff’s Matrix (Source:
differentiation
Ansoff, strategy.
1988) Table 23
Product 4.4 Brand strategies Table 24
Existing New
Using the Pegasus brand
Market penetration Product development Brand
Existing

Exploit new customers and industry Introduction of new market segments name to launch new
extensions
opportunities through: based on the focused need identification: product categories
*A formalized online platform for CRM Mind For the perfect getaway New products: ‘Mind’,
* Active promotion of sea planes due to Body For explorers and Individual ‘Body’, ‘Soul’, MICE
the large number of water bodies in the challengers product
based on varied customer
Market

island Soul For relaxation to the soul branding

requirements
* The domestic seasonal changes can be
exploited (ie: Sinhala Avurudu season) Professional For business services Four product lines under
Umbrella
*Application of digital analytics brand the Pegasus umbrella
* Online and credit card offers Credit card offers couples
*Improve mobile and interactive
marketing Co-branding with HSBC and
Commercial Bank
New Market development Diversification

4.5 Impact of growth strategies for the development of marketing assets Table 25
Market penetration Impact Product development Impact
-A solid online communication channel(s) will become a strong -New product categories need augmentation of services. Hence,
marketing asset in terms of identifying, anticipating and H the employees must be proactive and trained. M
satisfying the new customer groups.
-The use of sea planes coupled with other water-based activities -The innovative use of natural resources and location to cater to
enhances the full potential of Pegasus’s key natural resource- M-H the ‘adventure hunters’ and ‘soul finders’. H
its unique location.
-Guests stimulated by the seasonal variations require maximum -The marketing team can be utilized to develop digital
utilization of innovative ideas, physical resources to cater the M promotions based customer relationships via warehousing M-H
groups and the assistance of human resources. captured data.
-Implementation of digital analytics is a fundamental asset -The infrastructure of the hotel to be developed with state-of-the-
which enables the firm to increase efficiency and effectiveness art, sophisticated and desirable tech features in order to enhance
in delivering service, mapping demand variations, identifying H services to the MICE markets H
needs and monitoring hospitality trends in order to achieve
sustainable market gains.
4.7 Blue ocean strategy (Source: (Kim & Maubourgne, 2005) Table 26
Create uncontested market space Introduction of the mind-body-soul leisure categories and market leadership for MICE activities.
Make competition irrelevant No other hotel in the 4star sector has a strong focus on MICE activities, hence no competition.
Create and capture new demand Reaching the business customer with the help of the unique location (in-between the airport and the
capital)
Align the firm's activities in pursuit of Moving away from cost leadership to differentiation focus on to specified leisure and business
differentiation and low cost categories.
Break the Value-Cost trade off
Eliminate Reduce Create Raise
-Traditional hospitality -Heavy dependency on human -New value added services for the four -Innovative and technologically
services and marketing resource customer segments. advanced services.
techniques -High levels of operating costs - Create value through the natural resources -Digital communication based analytics
4.8 Justified conclusion on proposed strategy
The proposed strategy for Pegasus to attain competitive advantage among intense competition is to more away from its current
‘cost leadership’ strategy towards a ‘focused differentiated’ market which aims at catering to four customer segments- clearly
differentiated upon their needs. Hence, in order to grow, Pegasus could initiate new product development while continuing to
penetrate the existing market, which paves way to innovative and sustainable ways of exploiting current and potential assets.
Since of its new customer categories, Pegasus will be called a brand umbrella, where technologically Page | 7
advanced services processes will be adopted on its way to a Blue Ocean.
 2200 Strategic Marketing | CIM Membership No: 14338551
5.0 TACTICS and ACTIONS
5.1 Marketing mix Table 27
Product The core product is premium class hospitality. The core product is augmented according to the needs of the four customer segments,
in terms of leisure, adventure, tranquility and business needs. The potential product aims at delivering customer value through
technologically advance platforms with less human interaction.
Price Applying the value based pricing strategy to clearly distinguish the services among the customer segments while maintaining premium
rice margins. All price related details will be conveyed via mobile and web applications.
Place Introduce more location based leisure, sports and adventure activities to encourage guests to re-visit. Introduction of sea planes by taking
advantage of the national airport at near proximity and the surrounding natural waterways.
Promotion Moving away from mass marketing to more concentrated marketing promotions through building PR and direct marketing to customers
with more recency. Reaching out to guests through digital platforms and engaging with them on a regular basis. Reward systems for
loyal and relatively profitable customer groups.
Physical The ambiance of the hotel should be revamped from a 4-star look to a 5-star atmosphere, which will make the first impressions last.
evidence Also, the online platform needs to be re-launched with strong links with digital media platforms.
People The employees need to be trained and encouraged to commit themselves to cater to the varied needs f the new clientele, while maintaining
high levels of employee empowerment. An introduction of a suitable incentive system will help the firm reduce the costs of HRM and
retain a vibrant and committed resource pool.
Processes Automation of manual reservation systems and inventory systems. Introduction of analytics based historical data derived forecasting for
decision making. Innovative service offerings.
5.2 McKinsey’s 7S Framework (Source: Waterman et al, 1980) Table 28
Strategy The proposed strategy is to clearly differentiate and develop four new products developed based on the consumer behavior, while
continuing to penetrate the current market. In order to become a leading premium hospitality provider in Sri Lanka.
Structure Implement matrix organizational structure in order to cultivate strong linkages among all processes and central information system.
Systems MKIS, data warehousing mechanism, online service system and CRO system to be implemented.
Staff Recruit a tech team which specializes in hospitality services to enhance the services for new and tech savvy customers, while training the
current 181 to be empowered and initiate.
Style An atmosphere where the top management supports and encourages all divisions to seek, innovate and exploit organizational assets with
particular focus on marketing assets in order to gain optimum market returns.
Skills Staff training on web interactions, CRM and catering to multiple market segments with varied need structures.
Shared Company-wide belief that, the hospitality service is a sense of personal belonging which goes beyond being a mere business affair, which
values the Pegasus family is ready to deliver with integrity and performance.
5.3 Action plan and budget Table 29
2016 2017 2018 2019 Total cost
Action Responsible party
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (LKR millions)
Primary and Marketing manager
secondary market 0.4 0.4 0.4
research 1.2
New product Marketing manager
development 0.9 0.8 0.6 0.3 0.3 2.9
Brand re-launch Marketing manager
1.0 1.0 2
Development of Marketing manager
digital CRM 0.6 0.6 0.2 0.2 1.4
Development of Marketing manager
MKIS 0.7 0.6 0.2 0.2 1.5
Development of Resident manager,
physical resources Marketing manager 1.2 1.2 1 1.2 1.2
Marketing Marketing manager
promotions 0.5 0.5 0.5 0.5 0.5 2.5
Performance Marketing manager,
management HRM manager 0.3
system 0.3
Staff training and Marketing manager,
development HRM manager 0.2 0.3 0.5
Continuous Marketing manager
monitoring and 0.2 0.2 0.2
feedback 0.6
Total Cost 12.9
5.4 Action-Priority matrix Table 30
Quick Wins (High Impact, Low Effort) Enhance digital presence and capture multiple touch-points for each customer group.
Major Projects (High Impact, High Effort) Brand re-launch, expanding infrastructure, staff training and optimizing intangible resources.
Fill Ins (Low Impact, Low Effort) Increasing of ATL promotions.
Thankless Tasks (Low Impact, High Effort) Sustainable action to preserve the natural environment.
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 2200 Strategic Marketing | CIM Membership No: 14338551
6.0 MONITORING and CONTROL
6.1 Critical success factor (CSF) Table 31
Critical success factor (CSF) Key performance indicator (KPI) Monitoring frequency
State of geographic location Environmental measures to preserve and upgrade the surrounding environment. Monthly
Brand name and heritage Revenue, ROI and brand measures. Yearly
Service quality Measurement of service quality by benchmarking and QA/ServQ measures. Monthly
Proficiency of staff Productivity and efficiency measures. Staff incentive management systems. Monthly
Recreational activities Employee satisfaction, feedback and benchmarking with industry leaders. Quarterly
Innovation and technology usage Digital metrics, social media and mobile penetration rates, conversion rate measurement. Monthly
6.2 Balanced Score Card (Source: Kaplan and Norton, 1992) Table 32
Objectives Measures Targets
Y1 Y2 Y3
Achieving 30% revenue growth Turnover, Income % 15% 22% 30%
Attain a profit margin of 25% GP%, NP% 18% 21% 25%
Financial Achieving 23% Return On Investments (ROI) ROI% 17% 20% 23%
perspective
Increase online sales by 50% Online sales % 35% 45% 50%
Increase EPS by 20% EPS%, Share price growth% 15% 18% 20%
Improve customer satisfaction by 50% Customer satisfaction, Willingness to recommend, 35% 45% 50%
recency
Improve loyalty privilege holders up to 40% Customer loyalty, retention rate 15% 30% 40%
Customer Achieve a market share of 15% and be rated as one Relative market share%, relative unit share% 12% 13% 15%
perspective of the top four 4-star hospitality providers in the
island
Increase online customer engagement by 50% Conversion rate, Online reservation rate, social 20% 40% 50%
media metrics
Achieve and maintain operational excellence JIT, productivity measures 20% 20% 20%
Maintain a static 15% of service quality QA/ServQ measures 15% 15% 15%
Internal improvement
business Reduce accommodation issues and booking Number of complaints -60% -60% -60%
operations matters
Continuous engagement in waste management Annual wastage levels, Waste tons recycled % 40% 40% 40%
mechanism
Continuous improvement on digital marketing % of digital customers, CRO, levels of digital 30% 45% 60%
and CRM hearing
Uninterrupted learning and development of % of internal knowledge sharing 15% 15% 15%
Learning and
process improvement and service quality
growth
Employee empowerment and brainstorming of Feasibility study
perspective
fresh ideas
Innovation and scope for NPD Number of new ideas vs. number of ideas 30% 30% 30%
executed
6.3 Mitigating risks Table 33
Source Ways of mitigating
Political Build strong relationships with the governing parties where decisions could be made favorable based on mutual understanding
Social Appreciating the community and culture while making them a part of the organization through harmonious business agreements
Physical The threat of infrastructure destruction should be cautiously addressed since of the natural location
Technical The volatile nature of the technological sphere should be proactively approached and adopted to be in par with the growing clientele
Labor Continuous training and development programs, team building and fostering uniform values
Legal Awareness of legal boundaries, close attention on the industry rivals and proactive plans on ‘what if’ situations
6.4 Continuous improvement plan (Source: Deming, 1986)
Pegasus aims to implement and maintain the Plan-Do-Check-Act PDCA cycle in order to identify the process gaps and
minimize inefficiencies to achieve the stated objectives in a quality and sustainable manner.
6.5 Benchmarking
The following benchmarking strategies will be used by Pegasus in order to avoid strategic drift from the core objectives. This
benchmarks are to be excerpted from local and international 5Star hospitality operator’s practices.
1) Process benchmarking- to maintain efficiency and productivity of the processes.
2) Performance benchmarking- to compare and identify gaps in the performance and service delivery.
3) Competitor benchmarking- competitor analysis.
6.6 Contingency planning
Pegasus must identify the degree of impact from unplanned/ unpredictable events through scenario planning and contingency
plans developed to augment and adopt the marketing plan. This exercise must take the nature and potential
Page | 9
optimization capacity of the resources and capabilities of the company.