(Ithaca/NY, USA – 17 February 2013) Restaurant marketers tend to focus on target marketing strategies, but a new study indicates that mass marketing may actually be more effective in boosting business, according to a new report from the Cornell Center for Hospitality Research (CHR) at the School of Hotel Administration. In another new report from CHR, a panel of five industry CEOs call for a tight focus on the customer to boost industry revenue and asset value, as part of their analysis of the hospitality industries top challenges. The two recently posted documents are available at no charge from the CHR’s website.
Cornell Study Finds that Target Marketing May Not Be the Best Strategy for Restaurant Growth
Although targeted marketing approaches seem to make sense for restaurant marketers, a new study from the Cornell Center for Hospitality Research (CHR) finds that mass marketing strategies would be the best approach for increasing business. The study, “The Target Market Misapprehension: Lessons from Restaurant Duplication of Purchase Data,” by Michael Lynn, is available at no charge from the CHR.
“The conventional wisdom among both researchers and operators is that target marketing is the way to boost market share,” said Lynn, who is the Burton M. Sack ’61 Professor in Food and Beverage Management at the Cornell School of Hotel Administration. “However, my study found that the market is not that diversified—that is, the customers move from one restaurant type to another more or less in proportion to a brand’s market share, and one restaurant’s customers are not all that different from another restaurant’s customers. For this reason, I believe that mass marketing strategies will be more successful than targeted approaches in bringing in customers.”
Lynn’s study sought to test the effectiveness of target marketing by determining the extent to which a particular restaurant brand shares its customers with other restaurant brands. The analysis found that the extent of sharing is almost completely explained by the restaurants’ market share, rather than by their market targets, even among restaurants that have very different price points and concepts.
Each restaurant brand shared its customers with the other brands in proportion to the other brands’ shares of customers and in inverse proportion to its own share of customers. Thus, big brands like McDonald’s and Subway tend not to share customers as much as small brands. This pattern of data suggests that the different restaurant brands do not attract substantially different types of consumers, which in turn suggests that restaurant brands should aim most of their marketing efforts at increasing their appeal to all restaurant customers.
Keynote Panels Highlight Industry Challenges and Solutions
Creating value in the hospitality industry will require a stronger focus on the customer. This was one point made by a panel of five industry CEOs who provided their analyses of the industry’s key challenges, as presented in a new proceedings from the Cornell Center for Hospitality Research. Part of that focus on the customer will require a forward-looking approach to education, according to five deans of top hospitality education programs.
The panel discussions are summarized in a new proceedings available at no charge from the Cornell Center for Hospitality Research: “Cornell Hospitality Research Summit 2012: Critical Issues for Industry and Educators,” by Glenn Withiam. The panels were the keynotes for the 2012 Cornell Hospitality Research Summit, which brought more than 250 industry leaders and educators to the School of Hotel Administration for two intensive days of research presentations.
The CEOs highlighted the importance of operations excellence as this relates to the creation of value for the hospitality industry and improving customer satisfaction. Brand management continues to be important for the industry, particularly as hospitality companies continue their global expansion. The panelists also acknowledged the increasing influence of technology on all aspects of the industry.
Chaired by the school’s Associate Dean Steven Carvell, the CEO panel members were Arthur Adler, managing director and CEO, Americas, Jones Lang LaSalle; Sebastián Escarrer, former CEO and vice chairman, and current board member of Meliá Hotels; David Peckinpaugh, president, Maritz Travel Company; Ted Teng, president and CEO, The Leading Hotels of the World; and Adam Weissenberg, vice chairman, global and U.S. travel, hospitality and leisure leader, Deloitte & Touche USA.
Technology is also radically affecting curricula and teaching methods, as outlined by the hospitality deans. A foremost consideration is finding ways to prepare students for the industry of future—an industry that will be increasingly global. This will require a greater focus on critical thinking, as opposed to industry knowledge.
The panel of five deans of global hospitality programs was chaired by Kirk Kinsell, president, The Americas, of InterContinental Hotels Group. The deans were John Bowen, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston; Kaye Chon, School of Hotel and Tourism Management, The Hong Kong Polytechnic University; Fabien Fresnel, Ecole hôtelière de Lausanne; Bjorn Hanson, Tisch Center for Hospitality, Tourism, and Sports Management, New York University; and Christopher Muller, School of Hospitality Administration, Boston University.