GINGER HOTELS: PRICING MIX AND STRATEGIES AND THEIR EFFECTIVENESS (In assistance with Dr. Avinash Kapoor) BY: ROHIT SHARMA 11P161 S. P. KALYAN 11P162 SANCHIT VERMA 11P163 SAURABH MANDHANYA 11P164 No. of words: 7029 SHAFALI SUBRAMANIAN 11P165 EXECUTIVE SUMMARY Our study has been conducted on the ‘Pricing strategies employed by Ginger Hotels, India and their effectiveness’ in order to identify the different pricing method that are implemented by Ginger Hotels and study their differentiating factors with regard to the other players in the hospitality sector.
We further attempt to establish if these pricing methods bring the customers to satisfaction. This is how we measure the effectiveness of the pricing techniques. The Indian hospitality sector encompasses many different services. These include lodging, restaurants, event planning, tourism etc. Among these, Ginger Hotels focuses primarily on lodging. Ginger Hotels is a Tata Enterprise, which differentiates itself from the rest of the Tata Group Hotels by being a ‘Smart Basics Hotel’. Their prime focus is on providing key facilities that meet the key needs of the customer.
This model enables them to maintain economic rates, thus making them a low cost budget hotel. The different players in this budget hotel segment implement a competitive pricing methodology. Apart from this Ginger uses other pricing techniques to attract their target markets. These pricing methodologies are also used to increase the customer lifetime value. Our analysis starts with a study of the different price strategies commonly used in the services and hospitality sector. These include competition-driven pricing, customer-driven pricing, price-ending strategy, yie...
ld pricing and dynamic pricing.
Our hypotheses attempts at establishing that, in the case of budget hotels such as Ginger Hotels, among the ‘four P’s’ (Product, Place, Price, Promotion) Price is in fact the force which contributes mightily in bringing in the customers and ultimately to the success business success. An attempt is also made to understand if in the case of budget hotels such as Ginger Hotels, the customer is looking more for her/his delight needs to be satisfied or focuses on the key real needs. We also move this ahead and try to determine the extent to which the pricing strategy implemented by Ginger Hotels affects their customer’s value perception.
Through our primary and secondary research findings we were able to conclude that for Ginger Hotels, price and pricing strategies employed were infact the key sales driver in comparison to the other P’s of the marketing mix. Hence, the strategy employed by Ginger to provide several different price options and implement several pricing strategies was indeed an effective technique. Another interesting finding was that from the customer point of view, for the price they paid for services and lodging at Ginger Hotels, they were more focussed on their real needs being satisfied and the expectation of delight needs being fulfilled weren’t high.
Thus, Ginger needn’t divert large resources at satisfying their customer delight need as there is no demand for that yet. The customer’s value perception, that we calculated, lets us assess how satisfied the customer is with the services being provided at Ginger Hotels. In a competition-driven pricing method it’s mandatory to establish the value perception your customers have
of the services you provide, in order to maintain your market share. The research findings and analysis from this report can be used by Ginger Hotels in order to spot their shortcomings with regard to their customer’s needs and wants.
The study can further be extrapolated to any new entrants in the same segment. TABLE OF CONTENTS 1. INTRODUCTION i. Objectives ii. Justification iii. Significance iv. Ginger Hotels -Company Introduction v. SWOT Analysis 2. LITERATURE REVIEW 3. METHODOLOGY 4. HYPOTHESES 5. DATA COLLECTION AND ANLYSIS 6. RESULTS 7. CONCLUSION 8. LIMITATIONS OF RESEARCH 9. IMPLICATIONS OF RESEARCH 10. REFERENCES i. Appendix INTRODUCTION Objectives: 1. Identifying some common pricing strategies employed in the hospitality sector in the global and Indian context for middle income groups.
Underline any strategies prevalent globally but yet to appear in the Indian context. 2. Effect of pricing strategy on customer satisfaction – perceived value. 3. Comparison of pricing strategy between two hotels and its effect on market share. Justification: The Indian low cost hospitality segment is expected to grow by 50% in the next four years. 1 Bearing this in mind, as well as the plans of some global brands to foray into the Indian market, this study is aimed at providing a firsthand look into the current and prospective pricing strategies of this segment. Pricing and brand recall are two factors that affect customer choice.
Ginger being a TATA enterprise has a good reputation and customer acceptance. Having started its first hotel in the year 2004, it has already gained a foothold in the market thus becoming a strong candidate for our research on pricing strategy and its effect on the market share. Significance: 1. It could help incoming brands formulate a strategy 2. It could also help Ginger tweak the ineffectiveness if any to prevent the loss of market share. 3. From an academic point of view, it will aid in better understanding of the Marketing Mix for a firm and in innovations in the Market Strategies to gain better control of the market. . Research Implication: Insight into pricing strategy of Ginger; its foray into Indian Market and effectiveness of the same. Ginger Hotels – Company Introduction: Ginger Hotels: A Tata Enterprise The chain of Ginger hotels is operated by Roots Corporation Limited which is a subsidiary of the Indian Hotels Company Limited (IHCL). 2 Launched initially as IndiOne in Bangalore (2004), Ginger Hotels were the first of its kind of NextGen hotels to use the SmartBasics concept. 3 They endeavour to provide the class, comfort, style and warmth that a customer wants along with the luxury of affordability.
Essentially the philosophy of SmartBasics is to think of ‘intelligent’ facilities and services at ‘value’ pricing. It was reported that the turnover of the Ginger Hotel in Bangalore for 2005 was INR 3 crore while the estimated budget for a hotel was about INR 10 crore. 4 The hotels were to employ skeletal staff; services such as facility management, maintenance, and food and beverage services to be outsourced. The then Managing Director of IHCL also said that a Ginger Hotel will opened in different cities every six weeks
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