REVIEWER IN MARKETING
MIDTERMS
LESSON 6 – PRICING IN TOURISM AND
HOSPITALITY
OVERALL VIEW:
Price is the amount that a customer pays for
product and services. It is the value placed on
something that is measured in monetary terms.
Key factors affecting price incude costs,
organizational and marketing objectives, other
marketing mix variables, buyer perceptions of
value and price, competition, government
regulations and taxes, nature of market and
demand, pricing in different markets, price
elasticity of demand and other environmental
factors.
General pricing approaches used in marketing is
cost-based pricing, break-even analysis and
target profit pricing, buyer-based pricing, and
competition-based pricing. Commonly used
pricing strategies include prestige, market
skimming, market penetration, product
bundling, volume discounts, discounts based on
time of purchase, dicriminatory pricing,
psychological pricing, and promotional pricing.
Revenue management is used by tourism
establishment to maximize revenues by
matching demand and supply. Price can be used
as market recovery strategy. Price changes,
increase or decrease, should be handled well to
address customer perceptions and buyer
acceptance.  total cost is equal total revenue. A company
1. What is Price?
Price is the amount that the customer pays for
the products; the amount of money exchanged
for something of value. Price makes products
available to the target market and reflects the
value of the product. It is the sum of values
which consumers exchange for the benefit of
having or using the product. It goes by several
other names such as rent, professional fee, room
rates, tuition, fees etc.
Key Concepts Relevant to Pricing
There are few terms that need to be defined
in order to easily understand concepts in
pricing. They are as follows:
1. Sales - total amount that a company gets
based on quantity sold multiplied with
selling price.
2. Revenue - total income/ profit that the
company keeps after all the expenses have
been paid for. Simply put: sales minus
expense equals revenue.
3. Fixed Costs - costs incurred due to the
operations of the business and do not
fluctuate with volume of sales.
4. Profit Margins - level of income that is
desired by the company. This usually comes
out in percentage form as the amount of
mark-up placed on top of the fixed and
variable cost of a product.
5. Variable Costs - costs that vary based on
volume or quantity. Bigger quantities of the
same order will cost less than smaller 
quantities of the same specifications. This
concept is commonly known as economies
of scale.
6. Break-even Point - the point wherein
incurs a loss if costs exceeds revenue and
generates an income when revenue exceeds
costs. It is important to know the break-even
point especially for a new product, so that it
is clear to management at what volume of
sales is the company starting to earn an
income.

Key Factors Affecting Price
1. Costs. The setting of prices should
incorporate a calculation of how much it costs
the organization to produce the product or the
service. Both variable and fixed costs should be
included in the price.
2. Organizational and Marketing
Objectives. Companies get into business for
survival, profit maximization, high rate of return
of investment, brand equity growth and an
adequate share of the market. Some
organizations such as foundations and national
parks may set low fees mainly because they are
not commercial in nature.
3. Other Marketing Mix Variables. Price is
affected by the interplay of the other variables in
the marketing mix. Higher prices should mean
higher quality products and services, elite
distribution channels, and more personalized
promotions. For products priced in the lower
bracket, expectations on product and service
quality, distribution channels, and promotional
strategies need to be tempered relative to the
product's price.
4. Buyer Perceptions of Value and
Price. Buyers have different perceptions of
product quality and value based on branding and
image. Price affects buyer perceptions. The
higher the price, the higher the buyer's
expectations of quality are.
5. Competition. Knowing what competition
offers is an important factors in the success of a
business. In highly price sensitive markets,
companies try to win customers by selling a
lower price than that of customers.
6. Government Regulations and Taxes. Some
government regulations and taxes can either
cause a company to maintain its low prices or
increase its prices. There may be a government
regulation or ordinance that prohibits a company
from increasing its prices. However, taxes and
other governmental fees may be charged by
some local governments and prices should be
increased to cover for such additional expenses.
7. Nature of the Market and
Demand. Tourism caters to a highly segmented
marketplace. Pricing needs to address the
differences in the nature of such markets as well
as the differences in the demand of each market
segment.
8. Pricing in Different Markets. Different
markets have a different levels of price
sensitivity. Hence, a one price fits all markets
would not be recommended.
9. Price Elasticity of Demand. Price increases
or decreases normally have an effect on the level
of sales of the product.
If demand increases when price decreases, then
the product is elastic. If demand stays the same
even if there is a price cut, the product is
inelastic. In the tourism industry, as prices fall,
demand increases; hence, products are elastic.
Consumer demand is highly sensitive to price
changes. Price elasticity may be affected by
customer's perception of product uniqueness,
availability of substitutes, and how consumers
budget.
10. Other Environmental Factors. Other
environmental factors that may be beyond the
company’s control can affect pricing. These
factors may include but not limited to political
instability, calamities, environmental issues, etc.
  is added. This kind of pricing strategy, however,
Price and Its Relationship to Marketing does not look into the price sensitivity of its
Objectives consumers nor the pricing scheme of its
competitors. 
Tourism establishments may have different
reasons for coming up with a marketing mix
strategy. 
1. Survival. A company may be experiencing a
deep crisis that the most basic reason for its
marketing efforts is merely to survive. A crisis
may be a recession, an economic crisis, or stiff
competition.
2. Current Profit Maximiztion. Some
companies seek to use marketing for short term
financial gains. Gains such as current profit 2. Break-even Analysis and Target Profit
maximization, improved cash flows and swift Pricing. This kind of pricing approach is
return on investment are mostly for short-term when price is determined using break-even
financial gains. price and projecting a target profit. 

3. Market Share Leadership. Some companies 3. Buyer-based Pricing (Value-based). Some

build on marketing strategies that will help companies base their prices on the product's
company gain a huge market share and become value as perceived by the consumers. Perceived-
a market leader in its product category. This value pricing uses the the buyer's perceptions of
objective seeks to enjoy low costs because of value and not the seller's cost as the key to
high volume which will eventually lead to long- pricing. The question marketer's seek an answer
term gains. to is, "At what price are buyers willing to buy
my product?". 
4. Brand Equity Growth. Establishing a
positive brand image leads to high awareness
and perception of quality.
5, Product-Quality Leadership. Some
companies want their brands to be associated
with high quality. Marketing strategies seek to
make some brands known as the best service
providers in their category since consumers are
willing to pay more for good quality.
2. General Pricing Approaches
Aside from pricing strategies, there are general
pricing approaches that will help marketers in
determining the "right" price.
1. Cost-based Pricing. Cost-based pricing is an
approach that aims to cover costs and make a 4. Competition-based pricing. This approach
profot. When using cost-based pricing, the fixed looks at what price competitors are putting on
and variable costs are computed and a mark-up
their products and services. Companies base market. Howeveer, quality should be at par with
their mainly against the price pegged by their competition to ensure repeat sales. 
main competitors. Less attention is paid on
costs, margins, and demand.
3. Pricing Strategies
Pricing strategies are ways by which tourism
busineses offer products and services at the
"right" price. Some considerations in coming up
with the right price include the stage in the
product life cycle, market demand, competition,
and company objectives.
For new product pricing, strategies that can be
employed include prestige pricing, market
skimming, and market penetration pricing. 
Pricing that considers market behavior and
1. Prestige Pricing demand include product bundling, volume
discounts, discounts based on time of
Prestige pricing is used when the product or
purchase, and dicriminatory pricing. 
service is positioned to be luxurious and elegant.
Higher price projects that the product is high- 4. Product Bundling Pricing 
end and prestigious. This strategy seeks to
Product bundling is a strategy used to attract
attract a certain type of clientele and project a
buyers to purchase because of the reduced rate
degree of exclusivity. By its high price, it seeks
of the bundle compared to the total cost of the
to position itself as elite and hopes to target the
items if purchased individuall. The sellers using
Class A market.  
product-bundle pricing combine several of their
2. Market Skimming Pricing products and offer the bundle at a reduced price. 
Companies employ the market skimming pricing
strategy when the market is price
insensitive. Consumers become price insensitive
when demand is high and supply is low. Hence,
products and services that have high demand
usually set higher prices to achieve higher profit
margins. This is an effective short-term policy
since competition can easily come in and
provide more supply.
3. Market Penetration Pricing
Market penetration pricing is used when setting
a low initial price to penetrate the market
5. Volume Discounts
quickly and to attract many buyers for a large
market share. Some start-up companies use this Volume discounts are rates given to frequent or
strategy since they have lower operating costs high volume users to attact them to purchase the
than bigger companies. It is an aggresive way of products. Some companies have a demand for a
attracting cocsumers to try your product because product in large quantities through a single
it is cheaper than the existing products in the
purchase or for a continous period of time
throughout the year. 
6. Discounts Based on Time of Purchase
This strategy addresses the seasonality aspect of
the tourism product. A price reduction is given
to buyers who purchase services out of season
when the demand is lower or when purchased
way ahead of time. Early bird discounts and off-
peak season discounts are examples of this kind
of strategy.  appropriate supply in order to maximize
7. Discriminatory Pricing
Defined discriminatory pricing as the
segmentation of the market and pricing
differences based on price elasticity
characteristics of the segments. In this strategy,
the company sells  a product or service at two or
more prices, although the difference in price is
not based on differences in cost but tries to
maximize the amount that each customer pays.
This addresses the highly price-sensitive market
segment.  the following reasons:
Other pricing strategies, which may influence
purchase, include psychological
pricing and promotional pricing.
8. Psychological Pricing  or seats be increased at a specific day to meet
Psychological aspects like prestige references
prices, round figures, and ignoring end figures
are used in pricing. This strategy plays on the
psychology of the consumer. The consumer
defines the perceived value of the product.
9. Promotional Pricing
Promotional pricing offers discounts and short-
term incentives especially during the
introductory stage of the product or during
special activities such as anniversaries or
festivals. It gives the guests a reason to avail the
product and promotes a positive of the property.
This kind of pricing, however, may backfire on
the product since users might just wait for
another promotional offer for them to buy again.
4. Revenue Management
Revenue management is a systematic approach
to matching demand for services with an
revenues. With advancements in technology,
revenue management has become more
scientific and less gut feel-based. Most
hospitality establishments are able to juggle all
bookings and rate quotations in a way that
maximum revenue potential is achieved at any
given night. It plans out the ideal business mix
and adjusts rates on an ongoing basis as
reservations materialize.
Revenue management is beneficial to the hotel
and airline industry in particular because of
1. Product is perishable; thus, it is better to sell
the room/ seat at a low price than have it empty.
2. Capacity is fixed daily. In no way can rooms
demand.
3. Demand fluctuates and is uncertain
depending on days of the week and season of the
year.
4. Different market segments have different
lead times for purchase. Conventions and
conferences have longer preparation time that
can span from anywhere between one year to
three years, while a business traveler can book
even a week prior to travel.
5. Flexibility in pricing hotel rooms and
airline seats. The market accepts that hotel
Dealing with Price Changes
room and airline seat rates may vary depending
on purchase lead time and seasonality Know when to initiate a price cut or a price
increase. When does a company change its
Yield management is a form of dicriminatory
prices? Companies normally adopt a strategy
pricing wherein some of the market segments
that works well with their company. Companies
pay higher or lower prices than other tourists for
need to be careful to employ price cuts because
the same tourism products and services in order
doing so might lead to a price war where all the
to ensure optimal yield from the available
market players are affected negatively. One
inventory. It aims to manage revebue by
major reason to cut prices is when there is
controlling prices and capacity. Yield
excess capacity or inventory. Despite
management addresses the perishability of
promotional efforts, product improvements and
tourism products and services. It entails a
better distribution systems, a company may
thorough knowledge of the different market
resort to lowering its prices in the hope that sales
segments, demand, and booking patterns as well
volume will increase. Another reason for cutting
as price sensitivity of each market segment. It
price is to gain a higher market share. Amidst
enables organizations to sell possibly vacant
stiff competition, companies may choose to
rooms at reduced rates during off-peak but also
reduce its price or come up with a lower market
maximizes its revenue during peak periods. 
price than competitors with the intention of
gaining revenue through increase in volume. 

Market Recovery through Price

Some destinations that have loss market share
through different external and internal reasons
may recover from their loss through price
combined with effective promotions. Price can
represent a significant incentive to encourage
visitors to offset their fears and to return.
LESSON 7: TOURISM PROMOTIONS Various strategies are thought of and
implemented by the seller to ensure that the
Promotions is defined as seller-initiated efforts
tourism product or service is made known to its
to set up channels of information and persuasion
possible target market. These strategies seek not
to sell goods and services or to promote an idea.
just to inform people but more importantly to
Advertising is any paid form of non-personal
persuade people to buy the product. The end
communication about an organization, product,
goal of any promotional activity is to close the
service, or idea by an identified sponsor.
sale. 
Advertising aims to inform, persuade, and
remind. Direct marketing sends regular
communication to customers who are able,
willing, and most ready to buy. The important
elements of a successful direct marketing
campaign include the list, the message, and the
offer. Personal selling is defined as person-to-
person communication between a salesperson
and a prospective customer in which needs are
met in exchange for money or resources.
Public Relations is the process by which we
create a positive image and customer preference
through third party endorsement. Credibility
plays an important role in PR. Major PR Advertising, direct marketing, personal selling,
activities that the establishment can pursue sales promotion, public relations, and internet
include press and media relations, product marketing are known as the promotional mix.
publicity, corporate communications, lobbying, Putting the elements together based on the
and counselling.  Sales promotions is a direct available resources to meet a company's
inducement that offers an extra value or objectives is the tourism marketer's task. Just
incentive for the product to the sales force, because the company can afford to advertise on
distributors, or the ultimate consumer with the national television does not mean it should.
primary objective of creating an immediate sale. Hence, the tourism marketer should be mindful
Sales promotional tools include samples, of the costs and benefits as well as advantages
coupons, packages, premiums, patronage and disadvantages of specific elements of the
rewards, point of purchase promotions, and promotional mix to come up with the most
contests and games.  effective and cost-efficient combination of the
promotional tools available.
1. Promotions
2. Advertising
Promotions has been defined as the
coordination of all seller-initiated efforts to set Advertising is defined as any paid form of non-
up channels of information and persuasion to personal communication about an organization,
sell goods and services or pr0mote an idea. All  product, service, or idea by an identified
seek to inform, create awareness, attempt to sponsor. It is mass communication that is paid
persuade, and reinforce buying behavior of for. It can reach the largest number of prospects
customers. very quickly. Advertising covers the various
messages consumers receive from television,
radio, newspapers, magazines, billboards, transit
displays, and even online. Online options
include banner advertising, skyscraper ads, pay
per click, etc.
In the hospitality industry, advertising is
viewed as a way to create and maintain
awareness of the company, property, or
destination. However, not all tourism
products and services would benefit from
advertising. A carefull assessment of one's
resources and objectives needs to be done
before deciding on using advertising as a
tool for promotions. Big properties such as
hotels, fast food chains, and country
destinations may benefit from a carefully
planned advertising strategy.
Objectives of Advertising
An advertising objective is a specific
communication task to be accomplished
with a specific target audience during a
specific period of time. Advertising can be
classified based on its objectives: (1) to
inform, (2) to persuade, and (3) to remind.
Informative advertising is used when
introducing a new product or to build up
primary demand for the product. Companies
employ aggressive tools to ensure that a new
product creates excitement and demand
within its target market.
Persuasive advertising is used when
competition is stiff.  Companies rely on
persuasive advertising to be able to keep its
market share.
Reminder advertising is very important for
products that have reached the maturity
stage. Products attempt to maintain market
position even if they are already top of
mind.
According to Shoemaker et al. (2207), the
ideal hospitality advertisement should
accomplish five things:
1. Tangibilize the service element so that the
reader can mentally grasp what is offered.
2. Promise a benefit that can be delivered
and/or provide solutions to problems.
3. Differentiate the property from that of the
competition.
4. Have positive effects on employees who
must execute the promises.
5. Capitalize on word of mouth.
Types of Advertising Execution
For advertising to achieve its objectives of
differentiation, tangibilizing the product, and
having positive effects on employees and
customers, Kotler et al. (2010) present
different execution styles, as follows:
1. Slice of Life –shows how people use the
products in a  normal setting.
2. Lifestyle – shows how product fits with
one’s way of life.
3. Fantasy – creates a “wonder” world
around the product or its use.
4. Mood or image – builds positive images
or moods around the product such as beauty,
love, fun, and serenity. 
5. Musical – uses simple but catchy music
effectively through product jingles or songs. 
6. Personality – creates a character that
represents the product such as Jollibee, the
friendly Bee.
7. Technical Expertise – reveals the
company’s expertise with the product or
service. 
8. Scientific Evidence – presents research or
scientific evidence that the brand is better
than competing brands. 
9. Testimonial Evidence – features a highly
credible person such as a celebrity endorsing
the product. 
The Use of Celebrity Endorsers
Celebrity endorsement plays an important role in
helping products become more tangible and
create differentiation. The use of celebrity
endorsers becomes a preferred strategy for
promoting a product or service because the
celebrity lends his credibility to the product,
helps attract attention, provides a persuasive
message, and targets the audience based on the
celebrity's demographic profile. Roll (2010)
elucidates the following three main aspects to
consider in choosing a celebrity endorser:
1. Attractiveness of the celebrity to create a
positive impact on the product.
2. Credibility of the celebrity expressed through
expertise and trustworthiness, and
3. Meaning transfer between brand and celebrity
which refers to the compatibility of brand and
celebrity in terms of identity, personality, market
positioning and lifestyle.
3. Direct Marketing
With the moving away of marketing from
advertising to the integrated marketing
communications approach, direct marketing
(DM) has gained prominence and acceptance. In
the field of tourism marketing, which focuses on
niche markets. the direct marketing approach is
widely used.
Direct marketing is an interactive system of
marketing that uses one or more advertising
media to affect a measurable response. It seeks
to establish continuing relationships between a
company and its regular customers. Offers are
sent to a customer database of people who are
most able, willing and ready to buy the product. 
Advantages of Direct Marketing
Direct Marketing is an ideal promotional tool for
products and services that want to capture a
niche market.
1. Precision Targeting.  Having a good
database can help pin point propects based on
prospect's lifestyles, demographics, purchasing
patterns, etc. The direct mail campaign can be
very precise in specifying its target market.
2. Personalized Messages. A person's name is
the sweetest word in the world. Prospective
customers will definitely read through material
when their name is on it. Addressing specific
customers personally will capture their attention
than generic and random messages.
3. Privacy. The company's offer is not visible to
competitors since it is personalized. The
competition willnot be able to monitor what the
offer is. Hemce, they willnot be able to match it.
4. Faster Sales. Direct marketing can yield to
faster sales since it is targeted to actual users of
the product.
5. Variety of Packaging Options. A variety of
packaging options are available for direct mail
campaigns limited only by the marketer's
creativity and budget.
6. Less Competition (from other media
content). A letter or package that is opened by
the prospect will have less competition from
other media content compared to billboards, TV
commercials, and the like. The receiver would
take more time reading through your content
because it is personalized and unique.
7. Immediate Results. A response form or
action is normally solicited from the pospective
customer; hence, results can be immediate.
8. Measurability. The company knows the
number of direct mailers issued; hence, it will be
easy to determine response rates. 
Elements of a Direct Marketing Campaign
There are three important elements that should
be taken into consideration when planning a
direct marketing campaign. These are: (1) the
list, (2) the message, and (3) the offer.
The list contains all the names and contact
information of your target market. The list
should be accurate, updated, and narrowed
down based on the characteristics of the market
who you think would most likely be interested in
your product offering. This list may also be
referred to your database.
The message is important to
be customized and personalized. Marketers
estimate that prospective customers have very
limited attention spans and it will only take a
few seconds for them to make a judgement on
whether to continue reading your message or for
them to proceed to doing other things. It takes a
lot of skill to make the message simple and
interesting so as to make it easy for the prospect
to learn more about the product and the offer.
The offer should be interesting and worthy for
the prospective customer to consider making a
purchase. It should move the prospective client
into action. Making the offer not available to
other clients and available for a limited time
only, will help make the offer more appealing. 
Measures of Success
One of the advantages of direct marketing as a
promotional tool is measurability. A properly
executed direct marketing campaign can be
measured in several ways, namely:
1. The number of inquiries generated;
2. The ratio of conversions or purchases realized
from inquiries generated; and
3. Its communication impact.
4. Personal Selling
Sales representatives are the company's link
to customers. The salesperson represent the
business to its customers. Whatever the
impression and the image the salesperson
has is the image that the clients form in their
minds about the company he represents. 
Personal selling can be defined as the
person-to-person communication between a
salesperson and a prospective customer in
which the needs are met in exchange for
money or resources.
Sales representatives are an integral part of the
success of the tourism and hospitality industry.
Kotler et al. (2010) outline the primary task
sales professionals perfom for their companies
as follows:
1. Prospecting. The sales professional is tasked
to look into potential customers or "prospects."
A good and active database should be
maintained as well as networking skills to
ensure that there is a steady flow of new
customers coming into the business. 
2. Targeting. Sales professionals need to 2. Grow key accounts. Growing key accounts
determine how to prioritize limited time and means adding more companies into this key
resources to tap customers from their list of segment of the market. Cultivate secondary or
prospects.  marginal accounts with high potential to become
key accounts. 
3. Communicating. A constant stream of
communication should flow from customer to 3. Grow selected marginal accounts. Marginal
client and vice versa. Sales personnel need to accounts can provide the company with much
find ways and means to keep in touch with needed extra sales and revenue when demand
clients. This can be done through giving from key accounts is low. Choose marginal
information about new products and services or accounts that can be cultivated to provide
generating new business from clients.  additional consumption. 
4. Selling. Sales personnel are trained to do
product presentations, negotiations, overcoming
objections, and closing the sale. This is the core
of what the salesperson does for the company.
5. Servicing. Salesperson should not remain as
order takers. Instead, they should shift to
becoming customer consultants - helping clients
solve problems and rendering technical/ expert
assistance.
6. Information Gathering. Sales representative
assist the company in gathering intelligence 4. Eliminate selected marginal
information such as what competition is doing accounts. Some marginal accounts may not be
or what the company's need are. They also yielding any revenue for the company even after
suggest innovatiions based on market demands. several attempts to make it grow. Know when to
drop accounts so that time and resources alloted
7. Allocating. When there are product shortages
for said accounts can be channeled to other
or over-bookings, sales people assist in deciding
accounts.
which clients to prioritize based on past and
future business engagements.  5. Retain selected marginal accounts with
lower-cost sales support. Maintain marginal
Selecting Sales Strategies
accounts that take less time and resources to
1. Prevent erosion of key accounts. Key service. That way , these accounts can produce
accounts are your clients that sustain your marginal sales without much effort and budget
company. These accounts should be managed provided
well, given the proper attention and further
6. Obtain new business from selected
cultivated for more frequent consumption and
prospects. Business development should always
upselling. Salespersons should be trained how
be prioritized. New business from existing
these accounts can be kept and prevented from
accounts as well as promising prospects can be
switching to competitors.
beneficial to the growth of the company.

Steps of the Sales Process
1. Prospecting and Qualifying Prospects. The
sales process begins with identifying prospective
customers using a variety of sources. Prospects
start out as leads; these may come from people
who have been referred by your current clients,
clients of your competitors, new users,
databases, and inquiries. These leads are then
qualified to determine whether investing time
and resources in acquiring the customer will be
profitable.
2. Pre-aaproach. The pre-approach phase is the
stage wherein the salesperson seeks to
understand the business opportunities that the
prospects can provide the company. It is the
stage where the salesperson makes himself
familiar with the business of the company and
what the company's needs are in order to ensure
that there is a fit between what the company
needs and what the salesperson is selling.
3. Approach. The approach is when the
salesperson starts to communicate with the
prospect. Professionalism and strong social
skills are very important in establishing rapport
especially for the initial meeting. The
salesperson should also observe proper etiquette,
protocols, and cultural sensitivity all throughout
the engagement.
4. Presentation and Demonstration. Knowing
the prospect's needs and how to address his
problems, and having been given valuable
official time to listen to the product offer, now is
the time to deliver an impressive product
presentation. The product presentation should be
customized to the prospect and should include
features, benefits, and advantages of availing the
products and services.
5. Negotiation and Overcoming
Objections. This is a very challenging phase in
the sales process. This involves ariving at a
mutually beneficial exchange of value between
the seller and the buyer. Negotiation is the
pocess of resolving differences what the buyer
wants and what the seller wants to give in
exchange for what the buyer can pay for.
Objections come in different forms, it may be
because of the price or rate of your product, the
actual product or service, or simply a lack of
interest in the product. There are different ways
to respond to objections. You may choose to
deal with it directly or compensate for the
objection by offering other benefits that would
be important to the client too. 
6. Closing the Sale. Officially closing the sale is
done through a signed contract. Unfortunately, a
lot of salesperson are too afraid to ask for the
sales; hence, they go back to their offices
uncertain if they have closed the sale. 
7. Follow-up/ Maintenance. Once the sale has
been made and the service has been delivered,
the salesperson keeps the relationship going by
doing follow-up activities such as a phone call
or personal visit to ensure that the product and
service quality was provided. Customer
satisfaction often results in repeat business and
positive word of mouth. In case of customer
dissatisfaction, the follow-up call will enable
feedback and may be an avenue to address and
respond to concerns and complaints.
5. Public Relations
Public Relations (PR) is the process of creating
a positive image and customer preference
through third party endorsement. This can be
done using various activities all aimed to
generate a positive image through what others
say about one's establishment. 

PR banks on the idea that if a credible person –
not related to your business – says something
good about your product or service, consumers
may be more certain that it is really good.
Communicating to the company's public
includes both its internal and external audience.
The internal audience includes employees and
investors. Employees should maintain a positive
outlook for the company that they work for.
They should be the primary believers of the
benefits of the company's products and must
show excitement toward it as well as the
company they represent.
Major Public Relations Activities
Major PR activities that the establishment  can
pursue include the following:
1. Press / Media Relations  – the use of third
party endorsement through mass media channels
to generate publicity and awareness for huge
audiences.
2. Product Publicity – involves efforts to
introduce o publicize specific products, special
events, new developments within the business.
3. Corporate Communications – covers
internal and external communications promotes
understanding of the organization.
4. Lobbying - involves dealing with legislators
and government officials who may pass bills
that have an impact – whether positive or
negative – on one’s business.
5. Counselling – involves advising management
about public issues and company positions and
image.                                                                   
Contributions of Public Relations to
Marketing
The contributions of public relations  cannot be
downplayed. They can help marketing in the
following ways:
1. Assist in the launch of new product.
2. Assist in repositioning a mature product.
3. Build up interest in a product category.
4. Influence specific target groups.
5. Defend products that have encountered public
problems.
Public Relations Process
In planning PR Strategy, the following steps are
recommended.
1. Understanding the firm's mission, culture,
and target market. A thorough understanding
of the firm's mission and culture will help one
come up with an effective PR plan. This can be
achieved through research.
2. Setting of objectives. Marketing objectives
need to be established prior to the creation of a
PR plan. These objectives can either be to build
awareness for the new product, build credibility
for the brand, stimulate the sales force, and
channel intermediaries or lower promotion costs.
3. Defining the target market. Identify a
specific target market and get to know the
behavior of this specific segment of the market.
Understand how this market communicates and
what major factors can influence its purchase
behavior.
4. Designing the PR message. Create a strategy
by which your PR campaign will be designed
and what communication channels would be
effective to achieve your objectives and attract
your target market.

5. Implementing the PR plan. This means
putting the plan into action. Constant monitoring
and review will assist you in properly
implementing the PR plan.
6. Evaluating PR results. Evaluating the results
of the PR campaign can come in the form of: (a)
exposures of the brand; (b) awareness,
comprehension/ attitude change within the target
market; or (c) sales and profit contribution.  
Public Relations Tools and Audiences
Public relations can be used to address various
audiences such as employees , guests,
community groups, other stakeholders, and
special audiences. A variety of public relations
tools can be effective in addressing specific
audiences. 
Important Points To Remember
1. Effective public relations begins with top
management. The PR head manages how the
product or service will be regarded by the public
but it is the top management who leads in
creating good public relations. The owner or the
general manager should be at the forefront of
communicating positive information to various
audiences. The employees take their cue from
how the leader creates a positive impression.
2. No amount of PR can overcome a flawed
product. Public relations can create a positive
image of any product but no amount of PR can
overcome a bad product. There is still no
substitute for coming up with a good product.
There is no shortcut to success.  
Public Relations Opportunities
PR opportunities can be created based on a
strategic plan of action. Based on the company's
resources and objectives, the PR messages and
activities may be built around any of the
following:
1. The Owner/ Operator. If the owner or
operator has potential "star" appeal, or has
already built a positive reputation, building PR
messages around him may be the best option.
Celebrities who come up with their own
businesses become instant celebrity endorses.
2. The Location. One's location can also be
used to position the product positively. A well-
received business location can help bring
awareness to one's product or service. A unique
location can become a pull factor to ensure that
potential customers will take notice of your
brand. 
3. The Product/ Service. The product or service
itself can be an opportunity to create good public
relations. It can be used as the trademark of a
business. A good product creates positive word
of mouth and that in itself is the beginning of
good public relations.
6. Sales Promotions
Sales promotions is a direct inducement Sales Promotional Tools
that offers an extra value or incentive for the
1. Samples are offers of a trial amount of a
product to the sales force, distributors or the
product. Some samples are free, others
ultimate consumer with the primary
charge a small amount to offset its cost
objective of creating an immediate sale.
while inducing product trial. Sampling can
(Belch and Belch, 2007) It consists of short-
also be made to influential decision makers
term incentives to encourage the purchase or
such as company executives and sales
sale of a product or service. (Kotler, 2010) It
people in the belief that trial will improve
involves a variety of techniques that serves
knowledge, which will eventually lead to a
to accelerate purchase of products and
sale.
services. 
2. Coupons are certificates that offer buyers
The growth of sales promotions was
savings when they purchase specific
mainly due to the changes in the
products. It is used to stimulates sales of a
marketing environment. Belch and Belch
mature product as well as promote trial  of a
(2007) identified the following factors:
new product. This tool should be used
1. Growing power of retailers. carefully to avoid a price or coupon war
which detracts consumers from the intrinsic
2. Declining brand loyalty.
value of the product or service.
3. Increased promotional sensitivity
4. Brand proliferation
5. Fragmentation of the consumer market
6. Short term focus of the consumer market
7. Increased accountability
8. Competition
9. Clutter

3. Packages involves putting together a set

Kotler et al. (2010) spell out some factors to
consider in setting up a sales promotional
plan:
1. Objectives of the campaign
2. Type of market to be tapped
of complementing products to come up with
one bundle at a special price. If the products
are sold separately, the total cost will be
more expensive. This helps in increasing per
capita revenue and selling products that may
otherwise be unsold.

3. Competition 4. Premiums are goods offered either for

free or at low cost to provide incentive for
4. Cost and effectiveness of each tool consumers to buy a product. Some
establishments create novelty items that can
be brought home as a symbol of the product
brought, such as a mug that goes free with
coffee.
5. Patronage Rewards are bonuses in the
form of cash or items of value that can be
redeemed for regular purchases made. These
kinds of programs create more frequency of
purchase , positive word of mouth, and
possibly larger purchases.
6. Point of purchase promotion includes
displays and promotions that take place at
the point of sale. Some hotels display
brochures of their other branches at the
lobby or front desk. Some souvenir items are
positioned near the cashier for easy, random,
and impluse purchases.
7. Contests
and
Games give
consumers a
chance to win
something
such as trip
or cash upon
purchase of
products and
services.
Raffle entries
are given to consumers based on total
amount of consumption which are then
raffled off for a prize such as an overnight
stay in a hotel, a resort, etc.
Sales Promotions Process
The sales promotion program is the part of
the bigger promotional plan (which in turn is
part of the bigger marketing plan). The
following is the sales promotion process.
1. Deciding whether a sales promotion is
necessary.
2. Setting of objectives for the sales
promotions.
3. Selecting which promotional tools to use.
4. Developing the sales promotional
program, considering the following:
  a. Size of the program based on type of
incentive. The size of the program is
determined by the type of incentive to be
offered and the magnitude by which
program will be implemented. 
  b. Target Market of the
program. Determining the target market of
the sales promotion covers the decision to
offer the program to anyone or to a select
marker that has remained untapped for the
business.
  c. Distribution method to be used. The
marketer then decides on what distribution
method to use. Will the coupons or flyers be
mailed, handed out to passersby or should an
advertisement to be used? There are cost
implications per distribution method.
  d. Duration of the program. Deciding on
how long the program will run is a crucial
element of sales promotion. Its primary
objective is to induce immediate sales;
hence, if the period is too short, prospects
may not have enough time to decide to
purchase. If the period is too long, the deal
may lose some of its "immediate" effect.
5.  Implementing the program. A careful
implementation and monitoring of the plan
will determine the success or failure of the
plan. Make sure that everyone in the team is
ready to implement and maximize the added
promotional push.  Kotler et al. (2002) discussed that timing
6.  Evaluating the program. Since the sales
promotion runs for a specific period of time,
evaluating its impact based on added volume
of sales would be easy. The use of coupons,
cards, and other notices of the sales
promotion can help determine response rate.
Preparing the Promotional Plan
Below are the recommended steps marketers
need to take in coming up with a concrete,
efficient and well-planned promotional
campaign.
1. Decide on what promotional tools to
use.
Advertising
Direct Marketing
Sales Promotions
Public Relations
Personal Selling
Internet Marketing
2. Decide on which media channels to use.
Television
Radio
Internet
Telephone
Newspapers
Magazines
Newsletters
Brochures
3. Identify when the promotional tool will
be released and in which channel.
(Timing the Media Release)
Audience size and interests vary at different
periods of the year. Budgets are increased
when projeting an increase in interest.
decisions should take three factors into
consideration: (1) audience turnover, (2)
behavior frequency, and (3) forgetting rate.
Audience turnover is the rate at which the
target audience changes between two
periods. If turnover is great, Continuos
advertising is recommended.
Behavior frequency is the number of times
during the year that the target makes the
decision to purchase. The more frequent this
is, the more advertising should be done. 
Forgetting rate is the rate at which a
message is forgotten or behavior change
become non-evident. The higher the
forgetting rate, the more advertising should
be applied.
4. Evaluate the media results. 
Measuring the results of media messages is
a difficult task especially since there are
many variables that have to be taken into
consideration. Evaluation research and
tracking of media messages are important
for media planning. This will help identify
strengths and weaknesses of the
communication plan and adjust how
implementation can further gain positive
results. 
There is a variety of ways to test whether
communication campaigns are effective.
These include recall, recognition, and sales
effect. Media research firms have scientific
ways of testing whether campaigns are
effective or not.