The event started with an awe-inspiring speaker, Mr. Jagdeep [...]]]> Marketing Marathon 2010 – the annual Management summit held on 27^th February, 2010 at Vivekananda Education Society’s Institute of Management Studies and Research. Entered its 11^th year, with the theme of Marketing Marathon, i.e. to learn about changing Marketing Strategies in today’s scenario.

The event started with an awe-inspiring speaker, Mr. Jagdeep Kapoor, Chairman & Managing Director of Samsika Marketing Consultants P. Ltd. He enlightened us with the “Branding Strategies in India”. The other prominent speakers were, Prof. Dr. Cheema – Sr. Prof Marketing from G.N. Khalsa College and he talked about Rural Marketing and its increasing scope.

Ms. Veena Gidwani, CEO – Madison Public Relations, told us about the “Power of PR” through some interesting PR campaigns. This was followed by Mr. Rakesh Agarwal of JSW who stressed on the importance of Steel marketing and how integral it is to differentiate one from the others. The event also had Mr. T K Cherian, Global SME Head; TCS speak on IT Marketing his energetic style of speech giving was exceptionally well received by the audience.

One of the liveliest and the interactive speakers we had was RJ Neil from Red FM (93.5), as he spoke about “Power of Radio Advertising” and infotainment that is unique to the world of FM stations.

Post lunch some of the other speakers were Mr. Abhinav Kakade, Sr. Director (NPD & International), Neoacceal who recommended the youth to think of path-breaking creative solutions to problems, he was followed by Mr. Supratim Chaterjee (Media Marketing), who has been associated with some of the big media brands such as The Mumbai Mirror and Big TV and lastly Mr. Puneet Bhatnagar; The Creativity Mission Co-founder and NLP Trainer who ended the day by encouraging the students to think “Out of the Box”.

In a nutshell, Congruence 2010 focused on enabling academic and industry interface. With this purpose in mind, Congruence sparked panel discussions, debates and student interaction. Marketing Marathon was successful to bring together management students, academicians and industry professionals with a view to enrich them both.

12. What is the contract cycle for Equity based products in NSE ? Futures and Options contracts have a maximum of 3-month trading cycle – the near month (one), the next month (two) and the far month (three), except for the Long [...]]]> (Contd of Derivative Trading II )

12. What is the contract cycle for Equity based products in NSE ?
Futures and Options contracts have a maximum of 3-month trading cycle – the near month (one), the next month (two) and the far month (three), except for the Long dated Options contracts. New contracts are introduced on the trading day following the expiry of the near month contracts. The new contracts are introduced for a three month duration. This way, at any point in time, there will be 3 contracts available for trading in the market (for each security) i.e., one near month, one mid month and one far month duration respectively. For example on January 26,2008 there would be
three month contracts i.e. Contracts expiring on January 31,2008, February 28, 2008 and March 27, 2008. On expiration date i.e January 31,2008, new contracts having maturity of April 24,2008 would be introduced for trading.

13. What is the concept of In the money, At the money and Out of the money in respect of Options?
In- the- money options (ITM) – An in-the-money option is an option that would lead to positive cash flow to the holder if it were exercised immediately. A Call option is said to be in-the-money when the current price stands at a level higher than the strike price. If the Spot price is much higher than the strike price, a Call is said to be deep in-the-money option. In the case of a Put, the put is in-the-money if the Spot price is below the strike price. At-the-money-option (ATM) – An at-the money option is an option that would lead to zero cash flow if it were exercised immediately. An option on the index is said to be “at-the-money” when the current price equals the strike price.
Out-of-the-money-option (OTM) – An out-of- the-money Option is an option that would lead to negative cash flow if it were exercised immediately. A Call option is out-of-the-money when the current price stands at a level which is less than the strike price. If the current price is much lower than the strike price the call is said to be deep out-of-the money. In case of a Put, the Put is said to be out-of-money if current price is above the strike price.

14. Is there any Margin payable?
Yes. Margins are computed and collected on-line, real time on a portfolio basis at the client level. Members are required to collect the margin upfront from the client & report the same to the Exchange.

15. How are the contracts settled?
All the Futures and Options contracts are settled in cash on a daily basis and at the expiry or exercise of the respective contracts as the case may be. Clients/Trading Members are not required to hold any stock of the underlying for dealing in the Futures / Options market. All out of the money and at the money option contracts of the near month maturity expire worthless on the expiration date.

6. What are various types of derivative instruments traded at NSE? There are two types of derivatives instruments traded on NSE; namely Futures and Options : Futures : A futures contract is an agreement between two parties to buy or sell an asset [...]]]> ( Contd of Derivatives Trading I )

6. What are various types of derivative instruments traded at NSE?
There are two types of derivatives instruments traded on NSE; namely
Futures and Options :
Futures : A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. All the futures contracts are settled in cash at NSE.
Options: An Option is a contract which gives the right, but not an obligation, to buy or sell the underlying at a stated date and at a stated price. While a buyer of an option pays the premium and buys the right to exercise his option, the writer of an option is the one who receives the option premium and therefore obliged to sell/buy the asset if the buyer exercises it on him.
Options are of two types – Calls and Puts options :
“Calls” give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date.
“Puts” give the buyer the right, but not the obligation to sell a given quantity of underlying asset at a given price on or before a given future date. All the options contracts are settled in cash.
Further the Options are classified based on type of exercise. At present the
Exercise style can be European or American.
American Option – American options are options contracts that can be  exercised at any time upto the expiration date. Options on individual securities available at NSE are American type of options.
European Options – European options are options that can be exercised only on the expiration date. All index options traded at NSE are European Options.
Options contracts like futures are Cash settled at NSE.

7. What are various products available for trading in Futures and Options segment at NSE?
Futures and options contracts are traded on Indices and on Single stocks.
The derivatives trading at NSE commenced with futures on the Nifty 50 in June 2000. Subsequently, various other products were introduced and presently futures and options contracts on the following products are available at NSE:
1. Indices : Nifty 50 CNX IT Index, Bank Nifty Index, CNX Nifty Junior, CNX 100 , Nifty Midcap 50, Mini Nifty and Long dated Options contracts on Nfity 50.
2. Single stocks – 228

8. Why Should I trade in derivatives?
Futures trading will be of interest to those who wish to:
1) Invest – take a view on the market and buy or sell accordingly.
2) Price Risk Transfer- Hedging – Hedging is buying and selling futures contracts to offset the risks of changing underlying market prices. Thus it helps in reducing the risk associated with exposures in  underlying market by taking a counter- positions in the futures market. For example, an investor who has purchased a portfolio of stocks may have a fear of adverse market conditions in future which may reduce the value of his portfolio. He can hedge against this risk by
shorting the index which is correlated with his portfolio, say the Nifty 50. In case the markets fall, he would make a profit by squaring off his short Nifty 50 position. This profit would compensate for the loss he suffers in his portfolio as a result of the fall in the markets.
3) Leverage- Since the investor is required to pay a small fraction of the value of the total contract as margins, trading in Futures is a leveraged activity since the investor is able to control the total value of the contract with a relatively small amount of margin. Thus the Leverage enables the traders to make a larger profit (or loss) with a comparatively small amount of capital.
Options trading will be of interest to those who wish to :
1) Participate in the market without trading or holding a large quantity of stock.
2) Protect their portfolio by paying small premium amount.
Benefits of trading in Futures and Options :
1) Able to transfer the risk to the person who is willing to accept them
2) Incentive to make profits with minimal amount of risk capital
3) Lower transaction costs
4) Provides liquidity, enables price discovery in underlying market
5) Derivatives market are lead economic indicators.

9. What are the benefits of trading in Index Futures compared to any other security?
An investor can trade the ‘entire stock market’ by buying index futures instead of buying individual securities with the efficiency of a mutual fund.
The advantages of trading in Index Futures are:
• The contracts are highly liquid
• Index Futures provide higher leverage than any other stocks
• It requires low initial capital requirement
• It has lower risk than buying and holding stocks
• It is just as easy to trade the short side as the long side
• Only have to study one index instead of 100s of stocks

10. How do I start trading in the derivatives market at NSE?
Futures/ Options contracts in both index as well as stocks can be bought and sold through the trading members of NSE. Some of the trading members also provide the internet facility to trade in the futures and options market. You are required to open an account with one of the trading members and complete the related formalities which include signing of member-constituent agreement, Know Your Client (KYC) form and risk disclosure document. The trading member will allot to you an unique client identification number. To begin trading, you must deposit cash and/or other collaterals with your trading member as may be stipulated by him.

11. What is the Expiration Day?
It is the last day on which the contracts expire. Futures and Options contracts expire on the last Thursday of the expiry month. If the last Thursday is a trading holiday, the contracts expire on the previous trading day. For E.g. The January 2008 contracts mature on January 31, 2008.

( Contd on Derivative Trading III )

1. What are derivatives? Derivatives, such as futures or options, are financial contracts which derive their value from a spot price, which is called the “underlying”. For example, wheat farmers may wish to enter into a contract to sell their harvest at a future date to eliminate the risk of a [...]]]> FAQ’s

1. What are derivatives?
Derivatives, such as futures or options, are financial contracts which derive their value from a spot price, which is called the “underlying”. For example, wheat farmers may wish to enter into a contract to sell their harvest at a future date to eliminate the risk of a change in prices by that date. Such a transaction would take place through a forward or futures market. This market is the “derivatives market”, and the prices of this market would be driven by the spot market price of wheat which is the “underlying”. The term “contracts” is often applied to denote the specific traded instrument, whether it is a derivative contract in wheat, gold or equity shares. The world over, derivatives are a key part of the financial system. The most important contract types are futures and options, and the most important underlying markets are equity, treasury bills, commodities, foreign exchange, real estate etc.

2. What is a forward contract?
In a forward contract, two parties agree to do a trade at some future date, at a stated price and quantity. No money changes hands at the time the deal is signed.

3. Why is forward contracting useful?
Forward contracting is very valuable in hedging and speculation. The classic hedging application would be that of a wheat farmer forward – selling his harvest at a known price in order to eliminate price risk. Conversely, a bread factory may want to buy bread forward in order to assist production planning without the risk of price fluctuations. If a speculator has information or analysis which forecasts an upturn in a price, then he can go long on the forward market instead of the cash market. The speculator would go long on the forward, wait for the price to rise, and then take a reversing transaction making a profit.

4. What are the problems of forward markets?
Forward markets worldwide are afflicted by several problems:
(a) lack of centralisation of trading,
(b) illiquidity, and
(c) counterparty risk.
In the first two of these, the basic problem is that of too much flexibility and generality. The forward market is like the real estate market in that any two persons can form contracts against each other. This often makes them design terms of the deal which are very convenient in that specific situation for the specific parties, but makes the contracts non-tradeable if more participants are involved. Also the “phone market” here is unlike the centralisation of price discovery that is obtained on an exchange, resulting in an illiquid market place for forward markets. Counterparty risk in forward markets is a simple idea: when one of the two sides of the
transaction chooses to declare bankruptcy, the other suffers. Forward markets have one basic issue: the larger the time period over which the forward contract is open, the larger are the potential price movements, and hence the larger is the counter- party risk. Even when forward markets trade standardized contracts, and hence avoid the problem of illiquidity, the counterparty risk remains a very real problem.

5. What is a futures contract?
Futures markets were designed to solve all the three problems (listed in Question 4) of forward markets. Futures markets are exactly like forward markets in terms of basic economics. However, contracts are and trading is centralized (on a stock exchange). There is no counterparty risk (thanks to the institution of a clearing corporation which becomes counterparty to both sides of each transaction and guarantees the trade). In futures markets, unlike in forward markets, increasing the time to expiration does not increase the counter party risk. Futures markets are highly liquid as compared to the forward markets.

(Contd on Derivatives Trading II)

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Renowned [...]]]> Mumbai, February 15, 2010: Vivekanand Education Society’s Institute of Management Studies and Research will hold Congruence ’10; its annual Management event on 27^th February 2010. This year, Congruence will focus on Marketing in changing times and the event is envisioned to be a Marathon of Marketing.

Renowned Marketing professionals from accorss industries will share their years of invaluable knowledge with the Management students from Mumbai and nearby areas. They will speak on the current developments and trends in the field of Marketing and how these trends will influence the future.

The topics range from Branding to IT Marketing and from Rural Marketing to Public Relations. Some of the noted speakers include names such as Brand Guru Jagdeep Kapoor, Chairman, Samsika Marketing Consultants Pvt. Ltd., Abhinav Kakade, Sr. Director (NPD & International), Neoacceal, Rajesh Agrawal , Head-Steel trading, Cargill, T K Cherian , Global SME Head, TCS and Veena Gidwani , CEO, Madison Public Relations.

Congruence; now in its 11th year has always focused on enabling academic and industry interface. With this purpose in mind, Congruence sparks panel discussions, debates and student interaction. Marketing Marathon 2010 will similarly bring together management students, academicians and industry professionals with a view to enrich them both.

Time:  8.30am to 7.30 pm

Venue: Vivekanand Education Society’s Institute of Management Studies and Research 495/497, Collector’s Colony, Wadivali Village, Chembur Mumbai 400074.

To register please contact:

Mosam Shah – 9820707099                  Rahul Khemani – 9595100094.

mosam_s@yahoo.co.in rahullkhemani@gmail.com

About Vivekanand Education Society’s Institute of Management Studies and Research

Accredited by NBA,

Recognized By AICTE, New Delhi,

Affiliated to University of Mumbai

Certified By BV for ISO 9001:2008

Grade ‘A’ awarded By DTE, Govt. of Maharashtra

Late Shri Hashu Advani, an intellectual educationist who believed in inculcating high moral values in the younger generation, established Vivekanand Education Society (VES) in 1964. With 22 well-established institutions in its fold, it provides a gamut of academic programmes from pre-primary to the professional level.

With a mission to provide excellence in professional management education, Institute of Management Studies and Research was established in 1994. Approved by AICTE, it offers a two-year full-time postgraduate course leading to the MMS (Master of Management Studies) degree of the University of Mumbai.

In any organization, we find product the focal point. The hotel services also require a fair combination of core arid peripheral services. It is right to mention that in almost all the hotels of same category by and large the core services are found identical and therefore the peripheral [...]]]> The Product Mix

In any organization, we find product the focal point. The hotel services also require a fair combination of core arid peripheral services. It is right to mention that in almost all the hotels of same category by and large the core services are found identical and therefore the peripheral services divert a close attention where the hotel personnel need professional excellence. More innovative the peripheral services, more attractions is the product mix. This makes it essential that hotels and hotel companies assign due weightage to the formulation of an optimal product mix in which peripheral services prove to be a point of attraction.

The emerging trends in the socio-economic parlance necessitate an analogous change in the product mix. With the passage of time, it is quite natural that some of the services become outdated and therefore, we need to eliminate them. At the same time, it is essential that we keep our minds open and come to know the latest developments in the likes and dislikes of the customers, and while including new services in the product mix, assign due weightage to their preferences. While formulating the product mix it is pertinent that we make the ways for frequent innovation. It is also right to mention that frequency in innovation is found essential and at the same time easier in the context of peripheral services. The hotel professionals are required to formulate a package that helps in attracting the customers.

Modifications in the existing services by adding a few outstanding properties is found to be a suitable strategy for the development of product. The generation of idea, the formulation of concept, the analysis of product cost and the testing of services before their final commercial launch become significant in the very context. This necessitates an in-depth study of product life cycle. A hotel manager bears the responsibility of adding attractions to the product mix and this is possible when they have world class professional excellence.

While formulating the product mix for the hotel services, it is essential that catering management, restaurant and cafeteria management, management of bedrooms, management of convention halls are given due weightage. The boarding services are considered to be an important part of product mix. In addition, the lodging services also become significant. Here it is essential that facilities like light, water, electricity, ventilation, entertainment, sanitation arrangement of bed etc. are available to the guests. While formulating the product mix, the hotel organizations are required to make possible a fair mix of core and peripheral services.

The Product Mix for a Hotel will typically include:

Reception: – Welcome, Enquiry and sign posts.

Boarding: – Catering, restaurants and cafeterias.

Lodging: – Bed, room, light, water, sanitation, ventilation and view.

Entertainment: – TV, Dance, music, cultural shows and radio.

Shopping: – shopping arcade, fairs and exhibitions.

Personal Care: – Beauty parlour, hair cutting, gymnasium and jogging.

Communication and transport: – Telephone, news, papers, magazines, reservations   asasand car rentals.

Medicals: – first aid / ambulance.

The product mix of the Regent Mumbai include:

Room:

1. Deluxe room: 400 sq. ft, large, well appointed rooms, with executive desk and chair and sofa. Rooms feature luxurious marble bathrooms.
2. Executive room: 450 sq ft, spacious bedroom with king bed and large marble bathroom with separate walk-in shower. Roomy living room area with a sofa, coffee table, desk and chair.
3. The Regent Suite: located on the top floor. Two bedrooms, each with its own private bathroom, dining area, office and private living room, and lounge opening onto a private pool deck overlooking Mahim Bay towards the city.
4. The Presidential Suite: located on the top floor. Two bedrooms each with its own private bathroom, dining area, and large living and entertainment area, overlooking the Arabian Sea towards the north.
5. Executive Suite: 700 sq ft, two room suite. Separate bedrooms with king bed and suite bathroom and living room.

Services:

1. 508 luxurious, executive-sized rooms.
2. The spectacular lobby is destined to become Mumbai’s most popular meeting point.
3. Five enticing restaurants serving Indian, Chinese and European cuisine.
4. Fully equipped health club, fitness centre and squash courts.
5. Extensive, indoor and outdoor meeting and function space.

Promotion mix

For successful marketing, it is only not sufficient to concentrate on the quality of services but it is also impact generating that we promote our business in such a way that the prospects come to know about the quality to be offered to them as hotel customers. This focuses the attention on innovative promotional measures. The components like advertisement, publicity, sales promotion, personal selling, word-of-mouth promotion and telemarketing need due attention of hotel professionals.

Advertisement

Advertisement is a paid form of communication that helps in informing, sensing and persuading the prospects or users. While advertising, it is significant that the hotel professionals make possible a productive use of print media, broadcast media and telecast media. In the face of potentials, requirements and the intensity of competition, there is a need to select media for promoting our messages and slogans.

Of late, there is a significant development in the print media since sophistication in the printing technologies has made ways for offset printing, screen- printing and laser printing. These devices are found efficacious in attracting the prospects. There are a number of plus points in the print media. It is possible to be descriptive while advertising. We are in a position to attract the attention of prospects by displaying attractive scenes, events, landscape, comforts, costs etc. To be more specific when we have advanced print devices we find enough scope for using print media for advertising. In this context, it is pertinent that the hotel professionals advertise sensibly, intelligently and for that seek the co-operation of advertising professionals who can simplify and sensitize the process. Another plus point that we find in the print media is related to economy. We find it economic and therefore the promotion budget is not to be non-optimal.

The services of advertising professionals would make possible creativity in the advertisement messages and appeals. While selecting the media for advertisement, it is significant that we keep in our minds the magazines, newspapers preferred by the target audience. The magazines, newspapers preferred by women and teens should be given due weightage since in a majority of the cases, the decisions regarding a particular tour hotel are taken by them.

Of late, the telecast media is considered to be the most sensitive but expensive media of advertisement. In the world of marketing communication, top position is assigned to the telecast media because scope for audio-visual exposure makes ways for sensitising the prospects in a right fashion. It is against this ground that we find hotels advertising through TV.

In view of the above, it is right to observe that out of all the media, print media is found to be the most effective media for hotel advertisements. It is due mainly to fact that in the print media, the advertisers get an opportunity to display facts and figures which may be very much instrumental in convincing and persuading the prospects. The fact cannot be denied that while using print media, the materials used for advertising are found of world class, such as quality papers, quality print, quality photographs, attractive scenes or so. The use of quality materials paves avenues for attractions.

Publicity

Another dimension of promotion known as an unpaid form of persuasive communication also plays an incremental role in promoting the hotel business. While publicizing, the hotel professionals play a significant role by managing the media personnel for publishing news items related to the hotel. Public relations activities thus become instrumental in the process of publicizing. The British Institute of Public Relations has defined it as the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and the public.

The vast majority of hoteliers welcome publicity not only because it is free but because they know that most people buy a magazine or a newspaper to read the articles, news and editorials, rather than the advertisements unless they are looking for a product or are interested in booking a holiday or a restaurant or a convention hall or a wedding hall.

In the hotel business, there are a number of events which should be transmitted to the local press, such as the appointment of a new chef, list of cocktails, menus for certain functions held at hotel, particulars of certain important conferences or exhibitions to be held, menus for special days of the year, photographs of staff dressed up for special days and well-known people staying in the hotel. There are a number of hotels doing a lot of charitable work and helping in organizing charitable fund-raising events too.

In the public relations, the activities range from a press release to newspaper and magazines, especially to create the interest of prospects in a holiday age in a good resort of a country. The holiday package tours and trips on familiarity with a tour spot, organized by tour operators for the travel agents to help them in enriching their knowledge and making the travelling decisions. The  “wine and cheese parties” organized by the British Airways to launch not required Seychelles as a new resort or other such functions with the motto of enriching the knowledge of the prospects. There are a number of media sources available for publicity.

Illustration, copy and the spoken word are the primary publicity to media, which are grouped into the following heads:

• Printed Publicity
• Advertising Publicity
• Projected Publicity
• Structural Publicity
• Personal Publicity

Thus it is right to say that public relations activities occupy a significant place in the promotion mix of hotel companies. In the hotel companies, the tour operators, travel agents explore opportunities for educating the masses. In this context, it is important that hotel companies are getting the best co-operation from media and for which the Public Relations Officers or the marketers or the contact personnel bear the responsibility of developing rapport with them, organizing for them lunch or dinner, offering to them small gifts and influencing them to write in favour. You spend nominal amount but get big coverage, which help you substantially, if not at present of course in future.

Sales Promotion

In almost all the organizations, we feel the need of offering incentives for promoting the business. Like other organizations, the hotels and hotel companies also offer incentives to the users vis-à-vis to the personnel and organizations evincing interest in promoting the business. Sales promotion is considered as a temporary device to increase the business with certain objectives. It is a short term activity seeking to boost sales during peak demand periods to make it sure that the firm obtains its market share and helps launch a new product or support an ailing or modified services. These facts make it clear that sales promotion is complementary to advertising. Sales promotion and advertising objectives do not conflict but reinforce one another.

The tools of sales promotion are directed at the hotel staff, tour operator and travel agents and guests or clients. There is a three-tier arrangement for sales promotion in the hotel business. There are a number of incentives offered to them. In addition, some of the hotels also offer concessional travelling and accommodation facilities, especially to their staff. Besides, there are also cases of organizing sales contests.

Tools of sales promotion.

The tour operators and travel agents are also given the incentives. There are give-away and concessional accommodation facilities for them. Besides, the guests or clients are also offered incentives. They are allowed off-season discount and a number of small gifts, specially the habitual guests for the purpose of keeping on the business. The following tools of sales promotion are used for all the three heads instrumental in promoting the hotel business.

1. 1. Brochure: It is a device to stimulate customers and motivate them to visit a hotel and avail of the benefits offered by the management of the hotel. It is a detailed publication helping hotel companies in promoting their business. It is also called as a pamphlet bound in the form of a booklet. It describes and illustrates the services made available by hotels. We find brochure different to folder in size and contents as well. It requires careful planning of the layout, colour and paper used for publishing the contents. The brochures are supposed to focus on the theme and messages of promotion areas. The guests, clients get detailed in information from the brochure.

2.   Folder: Folders are the most commonly used sales promotion tools. In this       respect, it is essential that folders have an impressive appearance in totality. The particulars are required to be in brief but clear. It is a single piece of illustrated paper that is found less voluminous than the brochure. The folders are usually printed on a single sheet of paper and then folded. The quality of paper and printing used for publication are found significant to make folders more attractive. The hotels can use folders for promoting the business.

3.   Packaging: it is known as an attractive wrapper of product. When we talk about packaging in the hotel industry, our emphasis is on the outer cover and internal layout of brochures and leaflets. It is a final persuasive move on the part of hotels and hotel companies. The materials used for packaging are required to be attractive.

4.  Attraction leaflets: This is exclusively meant for presenting a view of the different theme parks, museums, amusement parks, outstanding points of attraction in the hotels or so.

5.   Merchandising: It is found helpful in promoting mass-market. This tool is found significant to restaurants and bars. The merchandising involves displaying of foodstuffs and drinks in the right location. The restaurants and bars are required to place their important items at such point where the guest and clients get an opportunity to have a close view of special drinks or special menu.

6.  Direct Mail Materials: The sales letters are found to be a direct mail material that can either be used alone or in combination with brochures and folders.

7.  Display Materials: In the materials to be displayed at sensitive points are posters, dispensers, exhibits etc. We can use these materials in the offices of the travel agents, tour operators or at the places where tourists come, such as tourists’ spots, resorts, airports, and railway and bus stations.

8. Competition and Exhibition: There are organization of competition and exhibition for promoting the business.

9. Special Officer: There is also a provision for special offer for all, such as users, travel agents, tour operators, hotel personnel.

The aforesaid tools of sales promotion help hotels and hotel companies in increasing the business. The hotel personnel need professional excellence to make the tools of sales promotion productive.

THE REGENT, Mumbai, has a sales promotion strategy such as THE REGENT ADVANTAGE CARD system. Under this scheme, card owner is entitled to a free meal on the purchase of a meal from any of the hotel’s restaurant. The card owner also gets various discounts such as 10% discounts in the THE REGENT’s Beauty Parlour, 30% discount on the suite room. This discounts are maximum for 10 persons on the food and beverage items also.

Word-of-mouth Promotion

Word-of-mouth promotion is very much instrumental in sensitising the prospects. In the hotel industry, it is much more significant that the satisfaction of users is give top priority. Of course, there are a number of components to promote sale but it is right to mention that other constituents may be ineffective but the word-of-mouth can’t. The word-of-mouth promoters are those who are satisfied with the services of hotels or are motivated to motivate the prospects. We can’t deny the fact that one bad meal would often do more damage by word- of-mouth than fifty good meals. The hotel guests take a good meal for granted but don’t forget to narrate to their friends and relatives about a bad meal or the bitter experiences of menu-fatigue. This speaks of the fact that word-of-mouth promotion can show more negative effects and therefore the hotels and hotel companies need to assign due weightage to this component of the promotion mix. Of course, the dissatisfied group of users is free to complain to the hotel management but often they don’t act. We find them close-mouthed and stiff-lipped till they make a good-bye and after going back they try their best to think twice before coming to that hotel again. Moreover they start narrating to their friends and relatives their bitter experiences of menu fatigue even without taking a rest. It is against this background that high-level functions, refined behaviour and world-class services by the hotel personnel carry some meaning. These services pave the ways for oral communication and recommendation. The persons acting as word-of-mouth promoters are also called the hidden salesforce.

Price Mix

Pricing decisions are found critical, challenging and chaotic. Of course, no marketing mix is found so much critical as pricing. Pricing is not only the outcome of the marketing forces. It conveys something to customers even about the quality of a product. There are a number of variables influencing the pricing decisions of an organization.

The pricing decisions are beset with many problems. No doubt in it that fixing the hotel tariffs is just like pricing other goods and services. At the same time, it is also right to mention that the hotel professionals need more excellence while fixing the hotel tariffs since the services are found of perishable nature. In addition, the seasonal fluctuation in demand and increasing intensity of competition also complicate the task of professionals. They need world-class excellence while making strategical and tactical pricing decisions.

Pricing decisions are found important in both strategic and tactical sense. In the tactical sense, it plays an outstanding role. This is due to the inseparability and perishability of the hotel products. This is also due to the inability of the service engineering organizations to carry over unsold stocks as a buffer to cope with future demand as found in the goods manufacturing organizations. Also known as price deregulation, tactical pricing is found instrumental in promoting the hotel business. Experiences show that in the hotel industry, it is found to be a major selling tool. There are a number of ways for practicing and benefiting from this tool:

• Seasonal Discounts Found applicable in the hotel industry. Customary to charge lower prices, specially during the off-season.
• Trade Discounts Found applicable in the hotel industry as tour operators and travel agents are offered discounts.
• Special Discounts In the hotel industry, we find special function room rates for overnight convention.

Pricing for Room Tariffs

Here, we go through the guidelines for fixing reasonable room tariffs. While fixing room tariffs, it is essential that we assign due weightage to the price structure to be adopted. The average room rate should not be much higher than the competitive hotels otherwise the market will not welcome it. A hotel may also adopt a policy to give high pay roll to provide a higher standard of services that the customers are ready to pay. There are some common factors considered by the hotel management and the public:

• Current charges prior to a review
• the established inflationary effect on cost
• the general economic situation
• the emerging trends in currency exchange and
• the intensity of competition.

Right averages and average room rates are the two important aspects to be taken into consideration while fixing hotel tariffs. The following are the economic criteria on room tariffs:

• The total amount of net operating costs (after contribution from the food and beverage departments). Net operating costs, net operating cost plus rent (if payable) net operating cost plus interest and net operating cost plus a target return on capital.
• This helps in calculating the total room sales and to achieve various levels of profits with the assumption that room department cost ratios, staff numbers and staff standards are known
• On the basis of the above, a schedule should be produced as per the average room rates required in order to break even and/or to achieve the profit targets at various occupancy levels.
• Budgets on room sales are to be planned based on sales mix taking into account the different sources of business.
• After this, based on the current quoted tariffs, it is possible to calculate the different sources of business, must/not be exceeded if the average rate required is to be achieved.

The most expensive suite of THE REGENT, Mumbai, i.e. ‘king suite’ is for Rs. 45000 + 20% taxes and the ‘Normal Suite’ is for Rs. 15000 + 20% taxes. In each room they are providing facilities such as T.V., computers, telephones, etc. the major difference behind this price variation is the different quality of services provided by the hotel such as better quality shampoo, bed sheets, and the décor of the room.

Pricing for Food and Beverage

In a majority of the hotels, there are three or four types of rooms but so far as the menus are concerned we can have dozen of dishes. There are some of the important points to be considered in the process:

• Do you find that your guests are eating in the hotel restaurant or coffee shop where the competitive restaurants are very close to the hotel. Generally a proportion does eat in but a significant proportion goes out.
• Where a hotel has two or more restaurants, they compete with each other and help splitting the market down the middle rather than offering a true price.
• The business in the function room.

Pricing for Function

Restaurants can get more business because the food, services or atmosphere is unique or just a little better than the competitors. But this aspect is found more complicated for function room services. Most of the functions are fairly routines that make it difficult to produce a gastronomic experience. In addition, this aspect is found more competitive specially on the price front. Payroll is found to be a major cost on functions. Unless we move to the self-service (buffet style) functions, the payroll would remain an important dimension. A number of hotels are found fixing a staff standard for functions based on their style of hotel or one waiter to a table of ten people or one waiter to two tables. Yet, we find payroll more expensive.

Place Mix

The problems hotels experience in reaching new customers lead them to use third parties as intermediaries. This costs money in the form of commissions, of course, but then so does advertising.

Let us consider the various means by which hotels and their customers can be brought together .

Direct individual sales

This is the simplest method. The would-be guest chooses a hotel and then contacts it by letter, telephone or some other medium. The only parties involved are the hotel and the customer. Of course, the customer has to find out about the hotel first. This involves some kind of advertising or promotion. Typical methods include mentions in guidebooks, local accommodation brochures or directories such as the motoring organization handbooks.

One of the main problems with direct contact is that the customer is usually located a considerable distance from the hotel. This means that he has to place a long distance telephone call in order to make a booking, and might have to repeat this several times In order to obtain a room at a particularly busy period. This costs money and (what is often worse) often takes a good deal of time.

However, not all travellers bother or are able to arrange accommodation in advance, and a hotel can always appeal directly to these. Roadside advertisements are examples of this approach.

Direct group sales

Many direct bookings are actually made on behalf of groups of one sort or another. Some of these are relatively small, such as sports clubs outings, overnight functions and the like, but others can be very large, such as major conferences. These are sometimes arranged by specialist agencies, but quite often the organizer prefers to deal with the hotel directly.

Groups are so important as a source of business that they are an exception to the usual rule that it is not worth the hotel’s while to try to contact the customer directly for some face-to- face selling.

Travel agents

There are two main types:

1 Retail agents These are the common and familiar high Street agents who sell direct to the public. Their main business is to arrange holidays for their customers, including hotel accommodation.

2 Company agents Some city centre agencies specialize in business house travel, while organizations such as major multinational companies are so big that it is worth their while to have their own travel agency to handle all their business. Sometimes they buy one outright, sometimes they simply invite a small agency to specialize in their business. Either way, the agency is likely to handle a lot of valuable bookings. It receives the usual commission, though some of its profits are likely to be passed on to its parent company or major client.

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Travel agents make their money from commissions received on the sale of tickets and bookings. Since tickets are fixed in price, the mechanism is simple. The agency carries a stock of blank tickets and simply remits the money less the commission to the carrier after it sells one.

Group Tour Operators

These include the familiar names whose brochures you will find in any retail travel agent. Many of the larger ones have their own retail out lets. In all, they sell an enormous number of holiday ‘packages’ and book a comparable amount of space at hotels.

This category also includes a vast number of smaller operators of various sorts. Some undertake ‘speciality’ work, arranging battlefield or birdwatching tours, safaris, ski trips and the like. Others specialize in arranging conferences. One of the fastest growing sectors is that of incentive travel, usually arranged by a company for its clients or its successful sales staff. This is a specialized field, and it has attracted its own full-time companies that provide a range of consultancy and administrative services.

Group tour operators do not receive commission because they are not introducing clients but rather booking the space themselves. They make their money from the difference between the cost of the separate elements of the ‘package’ (transport, food, accommodation, entertainment, etc.) and the price they are able to charge for it as a whole.

Airlines

The major airlines are in a special position, since they are large and commercially very powerful.

They are important to hotels because:

• The nature of their operations means that they are constantly having to send their flight crews to ‘overnight’ in hotels all over the world, and this in itself means that they create a considerable amount of business.
• They deal with an enormous number of travellers. Such travellers often find it convenient to arrange other services, such as car hire and hotel accommodation, at their destinations as part of the booking process. This puts the airlines in much the same position as the nineteenth-century railway companies, who also used to make hotel bookings for their passengers, and who even found it profitable to own and operate their own hotels.
• They frequently have to make arrangements for travellers ‘grounded’ through no fault of their own. Arranging overnight accommodation for a planeload of passengers held up by fog or some other operational problem is a common task for airline staff, and can be a useful source of business for hotels in the vicinity of major airports.

Hotel representatives

Hotel representatives were originally an American idea, developed because the USA is a large country with widely dispersed centres of population, yet a lot of ‘ business travel. Hotel representatives’ base themselves in one such area (some now have worldwide representation) and act as sales and reservation agents on behalf of a number of non-competing hotels from other regions. Local travel agents are able to make bookings for the clients quickly and cheaply, rather than incurring the expense involved in long distance telephone calls. Representatives will also distribute your brochures and other promotional mater locally. They are usually paid an annual fee plus commission on the reservations they generate.

Hotel booking agencies

Some areas are short of hotel space and it is particularly difficult to find accommodation in them at busy times of the year. This is fine for the local hotels, but not much fun for those trying to make bookings there. This has led to the development of specialized hotel booking agencies.

Some of these offer this service to individuals. Other hotel reservation agencies deal mainly with travel agents or conference organizers and offer a national, continental or ever worldwide service. Such agencies earn their living from commissions in the usual way, though there is usually also a ‘systems’ charge to cover the installation of any specialized equipment.

Group reservation systems

These are designed to help customers to book accommodation at any of the hotels within a group, usually with one local telephone call. They offer a valuable service to travel agents, who may have to make a number of bookings at different locations at the same time. However, the facilities can also be useful to the individual traveler, who is able to make a booking at a distant hotel with one local call. An incidental advantage is that the systems make it easier for the group to monitor overall booking trends.

Tourist Information Centres

The idea behind the Tourist Information Centre is quite different to that of the group reservation system. The latter aims to help customers to book at group hotels anywhere in the world. A Tourist Information Centre aims (among other things) to help customers’ to book accommodation at any hotel within its own local area. It resembles the hotel booking service, except that it is not a commercial enterprise but a local government service.

The Tourist Information Centre also differs from most of the other intermediaries in terms of the type of customer it deals with. Group reservation systems tend to be set up by the big international hotel chains and used by agencies specializing in business travel services. Tourist Information Centre booking services tend to be used by private individuals interested in much cheaper accommodation, often of the bed and breakfast type.

The Internet

Group reservation systems restrict the customer to Just one company or consortium’s hotels. The Tourist Information Centre system is not limited in this way, but it suffers from resource problems that reduce its usefulness. In any case, it still puts an intermediary between the customer and the hotel.

The Internet does away with these limitations, as more and more customers are discovering. Any would-be guest equipped with a computer and a modem can now call up a hotel database covering his proposed destination and select an establishment on the basis of its location, price and facilities. He can use the built-in e-mail facility to check its room availability, make a booking and even pay a deposit by quoting his credit card number, all without having to leave the comfort of his home or office. With a fax connection as well, he can have a confirmation slip printed off. In short, it allows him to select a hotel anywhere in the world and offers him instant connection at minimum cost, with all the advantages of immediate response and a permanent record.

The People

In an age of sophisticated information technologies when we have been making superhighway for communications, there is a basic change in the expectations of users. The personnel serving the hotel companies no doubt depend substantially on the instrumentality of information technologies but here it is also important that hotels and hotel companies assign due weightage to the development of personnel. Sky is the limit for perfection. This phrase is meaningful not only for the technologies but even for the people who manage them. It is against this background that the marketing experts the world over has been found making a strong advocacy in favour of an ongoing training programme for the personnel servicing the hotel companies.

The prime focus is on the front-line-personnel working in hotels in different capacities. The receptionists, the porters, the housekeepers, the waiters and waitresses and even the doormen play an incremental role in promoting the business. The sales executives, the marketing managers, the senior executives bear the responsibility of managing the front-line-personnel in such a way that the promised services reach to the ultimate users without making any distortion.

Of course, they are supposed to have proper education and knowledge regarding the services they need to offer but here, it is also important that the hotel organizes for them an ongoing training programme, refresher courses, capsule courses, lecture programme, specially related to the behavioral profile. There are several cases to quote that even the five star hotels where the users stay with high expectations, a minor mistake committed by the receptionists or the housekeepers has resulted in a big loss. The frontline- staff in particular needs to identify the changing levels of expectations of users and in a majority of the cases they virtually fail in doing such.

A gap is generated between the quality promised and the quality-offered. If the hotel personnel prove to be high-performers, personally committed, professionally sound, value-oriented, aware of the behavioral management; familiar with the aesthetic management; they can satisfy the users even if the sophisticated technologies develop a fault. This makes it essential that the hotel personnel are made available an ongoing training facility efficacious in enriching their professional excellence.

The cases of menu fatigue, power interruption, mismanaged bedrooms, function rooms and restaurants, indecent behaviour of doormen, poor information to the receptionists and enquires can be minimized considerably if due weightage to performance-orientation is assigned.

THE REGENT, Mumbai, has recruited only those employees who have completed their diploma or PGDBA in Hotel & Catering Management. They have 700 permanent staff and 200 trainees. Their whole staff is well educated and well mannered because they are from the Hotel Management field only. These employees have western formal dress code. Slang is not allowed by the staff. This is how THE REGENT is maintaining and improving their quality of service. Training is also given to these employees. For this training they are appointing a well-known personalities from the field of hospitality industry.

To find out the present status of this industry we have done a strength, weakness, opportunity and threat (SWOT) analysis. This will [...]]]> Hotels form one of the most important support service that affect the arrival of tourist to a country. There are around 1000 classified hotels and the total room availability is pegged at 60,000 rooms.

To find out the present status of this industry we have done a strength, weakness, opportunity and threat (SWOT) analysis. This will help us in understanding this industry and also identify the weak spots.

Strengths

1. A very wide variety of hotels are present in the country that can fulfill the demand of the tourists.
2. There are international players in the market such as Taj and Oberoi. Thus, the needs of the international tourists travelers are seen to while they are on a visit to India.
3. Manpower costs in the Indian hotel industry is one of the lowest in the world. This provides better margins for Indian hotel industry.
4. India offers a readymade tourist destination with the resources it has. Thus the magnet to pull customers already exists

Weaknesses

1. The cost of land in India is high at 50% of total project cost as against 15% abroad. This acts as a major deterrent to the Indian hotel industry.
2. The hotel industry in India is heavily staffed. This can be gauged from the facts that while Indian hotel companies have a staff to room ratio of 3:1, this ratio is 1:1 for international hotel companies.
3. High tax structure in the industry makes the industry worse off than its international equivalent. In India the expenditure tax, luxury tax and sales tax inflate the hotel bill by over 30%. Effective tax in the South East Asian countries works out to only 4-5%.
4. Only 58,000 hotel rooms are available in India today, which is less than the Bangkok hotel capacity.
5. The services currently offered by the hotels in India are only limited value added services. It is not comparable to the existing world standards.

Opportunities

1. Demand between the national and the inbound tourists can be easily managed due to difference in the period of holidays. For international tourists the peak season for arrival is between September to March when the climatic conditions are suitable where as the national tourist waits for school holidays, generally the summer months.
2. In the long-term the hotel industry in India has latent potential for growth. This is because India is an ideal destination for tourists as it is the only country with the most diverse topography. For India, the inbound tourists are a mere 0.4% of the global figures. This number is expected to increase at a phenomenal rate thus pushing up the demand for the hotel industry.

Threats

1. Guesthouses replace the hotels. This is a growing trend in the west and is now catching up in India also, thus diverting the hotel traffic.
2. Political turbulence in the area reduces tourist traffic and thus thee business of the hotels. In India examples of the same are Insurgency in Jammu Kashmir and the Kargil war.
3. Changing trends in the west demand similar changes in India, which here are difficult to implement due to high project costs.
4. The economic conditions of a country have a direct impact on the earnings in hotel industry. We can see that the present economic slowdown in India has let to a 51.6% fall in the industry average net profits for the second quarter of the current financial year, 2000.