Stakeholder marketing - June 2014

Stakeholder Marketing
The marketing mix and the key stakeholder groups of
Montagu Place Hotel
To: Marketing Manager
From: Marketing Assistant
Date: May 24 2014
CIM number: 38425209
Submission date: May 30 2014

Stakeholder Marketing 38425209
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Table of Contents
Task 1 – Audit…………………………………………………………………………………………………………………….. 06
Level of influence and impact…………………………………………………………………………………………………. 06
Montagu Place’s relationship with the three stakeholder groups with the most influence and impact….07
Montagu Place stakeholder marketing mix………………………………………………………………………………..08
Task 2 – Presentation…………………………………………………………………………………………………………… 10
A brief outline of the concept of stakeholder groups………………………………………………………………….. 11
Explanation of two methods of categorising/assessing an organisation’s stakeholders and
evaluation of how these methods enable organisations to identify their potential influence………………14
Evaluation of Montagu Place’s current relationship with each of its three most important
stakeholder groups………………………………………………………………………………………………………………..17
Task 3 – Report…………………………………………………………………………………………………………………….20
Introduction and explanation of the main mission/values of MP employees…………………………………….20
Recommendations for changes to the marketing mix………………………………………………………………….21
Evaluation of the impact on the relationship between MP and its employees…………………………………..22
Challenges faced in gaining organisational support and funding……………………………………………………23
References…………………………………………………………………………………………………………………………. 24
Company background………………………………………………………………………………………………………….. 26

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TASK ONE – AUDIT
The following audit identifies the most relevant stakeholder groups for Montagu Place Hotel (other than
customers). The audit is broken down into 3 main sections, each of them analysing different aspects of the
relevance these groups have against the Hotel. The content of each section is schematised using tables and
a short introduction that comes before.
Level of influence and impact
The chart below is designed to show how each stakeholder group influences MP and, also, it investigates
how and from where each group gains its power/interest towards the Organisation.
The columns “power” and “interest” are intended the same way as Mendelow (Mendelow, 1985) did when
creating his power/interest matrix (slightly adapted, with the introduction of “medium-low” and “medium-
high” grade): in this case the aim is just highlighting whether the interest of the stakeholder group in
influencing specifically the Organisation is high or low and whether it has the power to do so. Further
considerations that result from this will follow in other sections of the audit.
The column “influence exerted and impact on MP” gives an idea about the nature of the power held by each
group (according with the classification given by French and Raven – French and Raven, 1958) and it
indicates how actually the influence and impact is performed on the day-to-day activities of MP.
Table 1
Stakeholder Influence exerted and impact on MP
Managers
HighPower
HighInterest
MP has two managers in house (general manager and deputy general manager). Both are
very interested in all the processes carried out and responsible for the final outcome provided
by the Hotel. Their high influence derives from their legitimate power, their deep
understanding of the Company and the knowledge they have about the relative business
sector.
Managers have a decisive impact on decisions concerning planning, organisation and control.
Employees
HighPower
HighInterest
This group consists of the front desk team (5 members) and the housekeeping team (5
members). Both are considered process stakeholders, as they influence the procedures that
contribute to the final outcome. Being part of a small team and working closely to the
management, MP employees are not just tied to the company by a contract, but they have a
big interest in participating and contributing to the success of the Hotel. Their power is
considered to be high because of their decisive contribution to the final service outcome.
They are empowered by the management and tend to cover a managerial position
themselves (especially the front desk team members) whenever they remain alone in
representing the Company while handling guests in house.
Suppliers
Medium-LowPower
HighInterest
Among all the suppliers of MP, 3 of them are considered to have a strong impact on MP: a
Thai restaurant called 2Point that provides meals, Molton Brown (a really well-known luxury
bath and body products producer) and BitBuzz (internet service provider). All of them
contribute in adding the value to the guests and have a mutual interest with MP. Supplying
their product, they establish a proper partnership with the Hotel, that may well represent a
win-win situation if both parties work well. These suppliers participate not only in the creation
of value but also in the efficiency, effectiveness and image of MP.
Although they benefit from a considerable resource power (MP appreciates the fine quality
and convenience of 2Point and BitBuzz) and from a referent power (the reputation and brand
of Molton Brown are recognised widely), their power and influence are medium-low as MP
may be able to find a replacement whenever not satisfied anymore. From time to time,
replacing a supplier is even considered necessary in order to renew the offer.
Competitors
Medium-High
Power
Medium-Low
Interest
Competition in the neighbourhood is fierce, but the power exerted by other hotels on MP is
not particularly high. MP checks competitor’s rates and promotions weekly but, being a small
hotel and focusing on differentiation, it is not severely influenced by them. At the same way,
competitors have little interest in using their power unless they get seriously affected.
Regulatory
bodies
HighPower
Low
Interest
These are process stakeholders. Their primary need is making sure that activities carried out
at MP comply with the law. They exert a legitimate and coercive power on MP, since they set
regulations (Health and Safety law for example). However, the impact on MP marketing
decisions is not heavy and the influence is quite low as well.

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Pressure
groups/media
HighPower
Low
Interest
This stakeholder group comprehends players like, for instance, TripAdvisor, that heavily
impacts on MP thanks to its referent power. These communities have the power to condition
the Hotel activities (although they are not particularly interested in influencing them) and the
only concern of MP is to keep them satisfied.
Distributors
HighPower
Medium-LowInterest
The OTA (online travel agencies) such as booking.com, expedia etc, are outcomes
stakeholders, as they are influenced by the MP marketing decisions. They all sell rooms online
on behalf of Montagu Place and they get commissions (10%-15%) for doing so. They account
for the 32% of the reservations that MP get over a specific period of time. The impact on MP
is then massive: they benefit from that kind of power called “resource power”, since they have
the possibility to increase dramatically MP market penetration all over the world. Thus they
set the commissions and there is no chance for MP to negotiate them.
The nature of the stake is broad: they do not just have a contractual relationship with MP but
they also participate in giving value to the guest (offering, for instance, assistance after the
booking).
Although they have a high impact on MP, their influence on the marketing activities of the
Organisation is limited at setting the commission rates: ultimately, MP decides how to
manage reservations.
Their interest in MP is medium-low as, working everywhere in the world, they just do a tiny
volume of business with each hotel.
MP’s relationship with the three stakeholder groups with the most influence and impact
The three groups selected are employees, suppliers and distributors. These stakeholders are indeed
strongly committed and involved in the process of creating and delivering value, co-operating with the
Hotel and retaining guests.
Meaningful relationships are not improvised: they are based on a series of “relationship drivers” that happen
over time (the concept of time is represented by the relationship life cycle between two stakeholders) and
contribute to build loyalty.
Obviously, there must be pre-conditions in order to establish a contact between the parties: first of all there
has to be a series of activities that are shared and, consequently, both parties need to invest
resources/efforts to develop interactions. It is therefore evident that relationships imply commitment as
well: “relationship marketing involves creating bonds with members in different markets through
exchanging value, where the quality of what is exchanged and the service that delivers it conform to –or
even exceed- what has been promised” (Martin et al, 2002:154).
For each stakeholder group, the table below shows: the kind of relationship approach that MP and the
group have toward each other (column 1 – Hogg, 2012); the stage at which each stakeholder is in the
relationship life cycle with MP (column 2 – it is used as reference the model of Dwyer – Dwyer, 1987); the
level of commitment/frequency/intensity with which MP interact with each group and a descriptive
explanation of how relationship drivers are faced between MP and the three stakeholder groups (column 3 –
Hogg, 2012).
Table 2
Stakeholder 1. Relationship
Approach
2. Relationship life cycle
stage
3 Relationship level and key relationship Drivers
Employees Internal customer rela-
tionship – The
employees are conside-
red customers them-
selves: doing so, MP
ensures that value is
transmitted effectively to
the guests and that an
internal supply chain is
efficiently working to
allow beneficial exchan-
ges and relationships.
Commitment - This is
the case where both
parties are seriously
committed and wish to
continue the relation-
ship trying to make it
even better and seeking
actively the satisfaction
of needs and wants of
the other party.
Partnership - The relationship between MP and its
employees is the strongest in terms of elements such as
trust, commitment and mutuality. The Organisation
believes in its employees’ willingness to develop a co-
operative behaviour and the employees perceive the
possibility to build with MP their career.
MP commitment toward its employees is shown by the
motivation given on a daily basis; in exchange, employees
invest their resources not just seeking professional
development but also engaging the Organisation’s values.
Suppliers Network – Rather than
by mere contractual
Expansion – In this phase
the two sides get more
Proactive - The “proactive” relationship between MP and
its suppliers has been built up thanks to a series of positive

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obligations, these
typically long-term
relationships are based
on collaboration, trust
and mutual advantage.
and more benefits
because of their growing
interdependence.
Boundaries are tight and
there is willingness to
develop an even closer
relationship.
critical incidents that helped the creation of a loyal and
satisfying collaboration. Another important driver of this
relationship is the willingness to share information,
communication of its own needs and collaboration in
order to gain benefits from the relationship.
Distributors E-relationship – These
relationships are
supported almost
exclusively by informa-
tion and communication
technology. Although,
once in a while
representatives and GM
meet in person.
Exploration – This is a
stage where the terms of
the relationship have still
to be established
completely. Each party
uses their power to
negotiate conditions and
expectations and
commitment are yet to
be evaluated.
Accountable - These relationships are still kept on a level
where the involvement has margin of growth. Technology
plays a really important role and, initially, relationships
were established to maximise the profit and enlarge the
market of both sides. Slowly, MP and its distributors
became aware that a stronger and co-ordinated
collaboration might contribute in the creation of value for
their common customers/guests.
MP stakeholder marketing mix
The Organisation’s marketing mix aims to meet the needs of stakeholder in order to create competitive
advantage and additional value. The concept of relationship marketing applied to customers is used for
stakeholders as well, and the different interests and drivers of each group are taken in consideration. Below,
referring to the 7Ps, is shown how, for each group, the elements of the mix are used to meet MP’s
stakeholder expectations (with particular attention to CSR and ethical issues).
Table 3
Mix Employees Suppliers Distributors
Product
Since the employees are seen as
“internal customers” and they actually
feel being part of the Organisation, the
primary need to be satisfied is involving
them in the management activities. MP
shares information with its employees,
explains strategies, empowers them in
order to receive contributions, sets and
shows objectives that have to be met
every quarter.
MP grants to its employees flexible
working conditions (especially to
members of families with young
children at home). MP encourages and
helps its employees to make
professional experiences abroad in
other Hotels controlled by the Group.
MP buys products from its suppliers and
re-sells them in a luxury venue. The Hotel
complies with product safety regulations
(this aspect is really important when
serving food delivered by the Thai
restaurant for example) and respects
thoroughly the guidelines of its suppliers.
MP gives suggestions and asks its
suppliers for opinions in order to develop
new products or simply have them better
customised according with the
characteristics of the Hotel.
MP tends to be loyal to its suppliers and
offer long-term relationships.
MP gives its distributors the possibility to
increase their business. Distributors sell
rooms on behalf of MP and gets
commissions for doing so. MP provides
high standards of reliability since all the
bookings received from the distributors
are honoured and guaranteed.
Distributors may be allowed to sell
additional service that MP provides, such
as breakfast (commissionable as well).
The smaller intermediaries use the
image of MP as something to show in
their product portfolio: MP gives all the
information needed and assistance to
these distributors and co-operates with
them to ensure a fair and attentive
customer service.
Price
Employees are asked to work in shifts,
even during the week ends, bank
holidays and even for more than 5 days
in a row. Being a small team, each
employee may perform a task that
normally they are not expected to
cover: the housekeeping team may be
helped by the front desk team in
providing breakfasts, the front desk
team may be helped by the managers
to cover the reception, the managers
may seek help from the receptionists to
carry out some paperwork. This helps in
reinforcing the commitment of every
member.
Suppliers are expected to deliver their
products/services effectively and in time.
Some of the products/services provided
by MP to its guests are showing the
suppliers name (BitBuzz for internet
connection, Molton Brown for toiletries
products, Kimbo for coffe): in this case
the suppliers share with MP some
additional responsibilities deriving from
their corporate images and their
reputation. Beside the quality of the
products/services (that have to meet
specific standards), the ethical
behaviours of the suppliers are analysed
and considered by MP and its guests.
Online travel agencies sell on line MP
products. The prices shown in OTA’s
websites do not have to be deceptive. All
additional charges, taxes and extras have
to be clearly stated by the distributors to
the final consumer. Distributors do not
have any decisional power in rates
setting. MP competes with its
distributors as they get commissions for
selling rooms. MP could decide to make
promotions and offer directly discounts
to its guest; distributors are not able to
do so and, in this case, they may be
subjected to price discrimination.

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Place Interactions between employees and
MP happen mainly at the Hotel. As well
as managers have their office, other
employees have their designated places
to work. Reception is well equipped and
comfortable to stay in for many hours.
Changing rooms and other facilities
such as public toilets, laundry room and
a local gym are part of the work
environment and benefits schemes.
MP makes sure that the access to the
premises for deliveries is accessible and
safe. Possibly, a member of the staff of
MP is ready to assist the supplier upon
the delivery, signing delivery notes and
checking the goods quickly so as to
speed up procedures and do not waste
suppliers’ time. In the same way,
suppliers set up a corporate extranet for
MP to facilitate the procedure of placing
orders.
The software used by MP to manage
reservations is linked live to the systems
used by the distributors so as everything
is taking place on line. Confirmations of
reservations made by distributors come
through email. Other physical travel
agencies all around the world have the
possibility to check rates on MP website,
calling directly the Hotel or enquiring via
email.
Promotion
Rewards and bonuses are given when
meeting the objectives set (room
revenue and food & beverage sales).
Feedbacks are continuously provided
and performances measured. Appraisals
are carried out at least twice a year to
check improvements and give
instructions. Staff meetings are
regularly organised. A company
magazine is published and distributed
to the staff each quarter: information is
about performances of the company
and the staff, rewards and activities
organised to support the community.
MP communicates with its suppliers
through email and phone but, often,
there are chances to have a direct
contact with the suppliers when the
goods are delivered. Sometimes MP
promotes its suppliers’ services even if
that does not result in any form of profit.
The recommendations are perceived by
the guests as a sign of trust and
reliability.
MP is often being offered promotions
and discounts to try new products or
simply if a bigger quantity of goods (or a
more intensive usage of services) are
asked.
Communication between MP and its
distributors is mainly based on the use of
internet. However, once in a while a
representative of each distributor meets
the GM of MP in person.
All the features and characteristics of the
Hotel have to be communicated to the
distributors complying with standard of
truth. Flaws or lack in infrastructure
services (no lift facility; rooms placed in
the basement) should not be omitted.
Physicalevidence
Employees are provided with elegant
uniforms and badges. MP requires its
employees to show a neat appearance
and guarantees them in return
gorgeous locations for meetings and
staff parties, whilst e-learning platforms
for trainings are accessible and look
encouraging to use.
Suppliers’ products are well presented
and well integrated in the ambience of
the Hotel (for instance, guests are given
a well designed BitBuzz voucher showing
an internet password; Louis Latour wines
are poured in sleek labelled glasses). MP
asks its suppliers to be well presentable
too: mini cab drivers have to look
professional and reassuring.
Pictures provided by MP to its
distributors do not have to be misleading
and have to correspond to what is
offered to the guest. Online travel
agencies need to receive updates and
images in excellent conditions as they
need to advertise them and sell them to
their own customers.
People
MP makes sure that its employees are
motivated and that agree on the
Organisation’s mission and values. One
of the values is “community”: MP is
strongly committed in helping the local
community and asks its employees to
participate. Some of the employees are
asked to take part to popular charity
events in London, donate part of their
tips and commission to a designated
charity and come up with spontaneous
ideas to support people in need.
The suppliers are chosen considering
their fair trade ethos. MP expects its
suppliers to work complying with UK
regulations and going beyond them. MP
tends to refuse collaborations with
companies that have poor wages and
poor working conditions for their
employees. MP also prefers to
collaborate with suppliers that care
about environmental issues and use safe
materials.
Each distributor (depending on its
business size) seeks a different approach
with the Hotel. MP have a representative
who deals with big intermediaries (such
us booking.com, expedia, laterooms),
whilst smaller distributors (such as
hoteltonight) operate just in London and
may require assistance more often and,
sometimes, a customised interaction. In
the latter case MP is capable to give
assistance, training and indications to its
smaller distributors.
Process
All the employees receive health &
safety, first aid trainings and other
ongoing trainings. Employees have the
possibility to sign up for optional
courses that involve different aspects of
the hospitality activities carried out in a
hotel. Whenever possible, employees
are constantly supervised, advised and
helped during their shifts.
MP ensures that its suppliers have all the
information they need and get orders
clearly and with sufficient time.
Performances are analysed and guest’s
preferences are communicated to the
suppliers in order to customise as much
as possible new products and be more
efficient.
Suppliers get paid by invoices or directly
in cash upon delivery.
Distributors’ customers will be future
guests at MP. Between the purchase in
the OTA’s websites and the arrival at the
Hotel, the customer may need assistance
and may contact either the distributor or
directly the Hotel. MP guarantees
assistance not only to the guest but also
to the distributors in order to sort out
any possible issue or need the
customer/guest may have.

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TASK 2 – PRESENTATION
NATURE AND INFLUENCE OF
STAKEHOLDER GROUPS
Task two: Presentation
Table of contents
Slide 1: A brief outline of the concept of stakeholder group – 1/3
Slide 4: Assessing an organisation’s stakeholders: reasons and methods chosen
Slide 5: Assessing an organisation’s stakeholders. The Mendelow’s power/interes matrix – 1/2
Slide 6: Assessing an organisation’s stakeholders. The Mendelow’s power/interes matrix – 2/2
Slide 7: Assessing an organisation’s stakeholders. The Egan’s participant stakeholder framework – 1/2
Slide 8: Assessing an organisation’s stakeholders. The Egan’s participant stakeholder framework – 2/2
Slide 9: Montagu Place relationship with its Employees
Slide 10: Montagu Place relationship with its Suppliers
Slide 11: Montagu Place relationship with its Distributors

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A brief outline of the concept of stakeholder groups – 1/3
Company as an open system
Actors in the marketing environment
Many definitions of stakeholders
Freeman: “any group or individual who can affect or be affected
by the achievement of an organisation’s objectives”.
The nature of the stake
Bourne: “by definition, a stakeholder has a stake in the activity. This stake may be:
- an interest
- rights (legal or moral)
- ownership
- contribution in the form of knowledge or support”.
Slide1
In order to analyse the concept of stakeholders groups, it is important to
understand that a company interacts with other forces/elements in its
environment. An organisation is hence considered an open system that
establishes relationships and exchange feedbacks with other parties.
All these actors are part of the firm’s marketing environment, considered to
be complex and dynamic. Besides the internal organisation, the other two
dimensions that form the broader marketing environment are the
microenvironment (with actors that influence directly the company) and the
macro-environment (with elements that shape opportunities and pose
threats to the company). Forces within the company’s marketing
environment affect its ability to build and maintain successful relationships
with target customers (Kotler and Armstrong, 2014).
The above highlights the importance of knowing and dealing efficiently with
all these actors, which are called stakeholders. They are people or groups
“with the power to respond to, negotiate with, and change the strategic
future of the organisation” (Eden and Ackerman, 1998).
Stakeholders have interests towards the organisation that basically regard
what the company is doing, what resources the company has and what the
company should achieve (Hogg, 2012).
A concise definition of stakeholder is given by Freeman (Freeman, 1984:46):
“any group or individual who can affect or be affected by the achievement of
an organisation’s objectives”.

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Categories of stakeholders:
- Internal
- Connected
- External
Stakeholders contributions:
- Information/knowledge
- Emotionality
- Experience
- Credibility/trust
- Image/reputation (Sachs, Edwin and Isab)
Slide 2
There are three categories of stakeholders: internal, connected and external
stakeholders; as seen before, all of them refer to different sub environments.
However, although this is a useful classification, a precise stakeholder (such
as employees for example) may be part of another category and have also, at
the same time, different interests.
The internal stakeholders are members of the organisation. The key groups
here are managers and employees.
The connected stakeholders are strongly concerned about the business
activity of the organisation and exert their influence in the firm’s
microenvironment; these are distributors, shareholders, customers, suppliers,
retailers.
The external stakeholders are not directly connected to the organisation but
do still have interests and can have influence on it. Society, pressure groups,
regulatory bodies, government, press/media, professional bodies, local
communities are external stakeholders.
Stakeholders set constraints but can also give contributions of the following
nature to the company: information/knowledge, emotionality, experience,
credibility/trust, image/reputation (Sachs et al, 2009).

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Organisations and their stakeholders: a mutual
exchange of benefit and responsibilities.
- Needs
- Power
- Influence
- Impact
Slide 3
Starting from the assumption that even the stakeholders contribute to the
creation of competitive advantage and value, it is clear how each group plays
an important role in the decision undertaken by the company. Each group has
different interests in influencing the marketing decisions because, each of them,
has specific needs and wants. However, not every stakeholder group has the
power to do so and not all of them, even having the potential power, can
heavily impact on the organisation. From here, the need for a company to
manage and analyse the relationships with its stakeholders.
Researches demonstrated that organisations tend to be more successful if they
include the benefit and risk potentials of their strategic stakeholders in their
value-creating processes (Sachs et al, 2009).

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Assessing an organisation’s stakeholders:
reasons and methods chosen
Why? Prioritize stakeholders needs and adopt
appropriate relationships.
Assessing stakeholders in three main steps:
- Developing a list of stakeholders
- Identifying their mutuality with the organisation’s work
- documenting each stakeholder’s direction of influence and relationship to the organisation (Bourne)
Two methods chosen:
- Mendelow’s power/interest matrix
- Egan’s participant stakeholders framework
Slide 4
Assessing an organisation’s stakeholders is useful to prioritize their needs and
adopt appropriate stakeholders relationships. Bourne (Bourne, 2009)
summarises the process of identifying/assessing stakeholders in three main
steps: developing a list of stakeholders; identifying their mutuality with the
organisation’s work; documenting each stakeholder’s direction of influence and
relationship to the organisation.
Many models have been proposed within the academic literature by different
authors. In this case, it has been taken as reference the Mendelow’s
power/interest matrix and the Egan’s participant stakeholder framework. Both
of them help to recognize the level of power and interest exerted on the
organisation and, hence, the influence held by each stakeholder group.

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Assessing an organisation’s stakeholders.
The Mendelow’s power/interest matrix – 1/2
(Mendelow 1985)
Slide 5
Mendelow (Mendelow, 1985) designed a matrix that shows the level of interest
that each group has in the operations of the organisation and the level of power
that the same group is able to exert on the organisation to have its interests
achieved. Each group is plotted accordingly into the matrix and can be then
categorised by different types of relationship that the organisation should
maintain with each group. In fact, the combination of these two factors (power
and interest) gives four main relationship approaches that can help determine
not only the kind of relationship that has to be established with each group, but
also the influence that each stakeholder has on the organisation.
Assessing an organisation’s stakeholders.
The Mendelow’s power/interest matrix – 2/2
• High influence
• Medium influence
• Medium influence
• Low influence
Slide 6
The potential influence on the organisation of each stakeholder group is related

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to the position occupied in the matrix by that same stakeholder. A stakeholder
plotted in the “minimal effort” quadrant has a low influence on the
organisation’s decision, whilst, at the contrary, a stakeholder with high power
and interest (key player) is likely to have a huge influence on the organisation.
Assessing an organisation’s stakeholders
The Egan’s participant stakeholder framework – 1/2
9 categories that vary
according to the participation
on the organisation’s activities.
Each stakeholder group is
managed differently.
What are their sources of
influence?
Slide 7
Egan (Egan, 1994) created a categorization that enables an organisation to
understand how to manage each stakeholder group according to their
participation on the organisation’s activities and depending on the capacity to
act as an agent of change for the organisation. Egan identifies 9 categories that
represent a continuum: at one extremity are the stakeholders capable to
support entirely the change agent, whilst at the other end are the stakeholders
that are still affected by the organisation agenda but are powerless and are not
able to influence decisions. As well as the Mendelow’s matrix, this
categorisation highlights the fact that each stakeholder group should be
managed differently.

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Assessing an organisation’s stakeholders
The Egan’s participant stakeholder framework – 2/2
Sources of influence
Nature of power (French and Raven)
- Legitimate power
- Expert power
- Resource power
- Referent power
- Coercive power
Nature of stake(Hogg)
- Market or contractual relationships
- Participation and contribution
- Direct authority (managers, regulatory bodies); other direct or indirect form of influence.
Slide 8
The position held by each stakeholder and its consequent influence is
determined by the nature of the power and the nature of the stake they have.
Each stakeholder can hold different kinds of power deriving from their status or
role in the society, business sector or regulation system. They can decide how
exercise their influence considering the nature of the stake they hold.
Montagu Place relationship with its Employees
Slide 9
Hogg (Hogg, 2012) distinguishes several relationship levels in a continuum that
implies low levels of frequency/intensity/mutuality in one side (basic
relationship) and high levels of those in the other side (partnership). The
relationship between MP and its employees is a partnership, exactly because
they work closely together and strive to enhance customer value. Therefore,

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MP develops a relationship approach with its employees defined (Hogg, 2012)
internal customer relationship; the employees are treated like customers: their
needs are met in order to create an efficient internal supply chain that works to
improve customer value. Even the stage along the relationship life cycle of MP
and its employees is at its peak.
Montagu Place relationship with its Suppliers
Slide 10
The level of the relationship between MP and its suppliers is proactive; at this
level, the two parties are loyal to each other and both of them contact each
other in a regular basis for a wide range of purposes. In fact, the relationship
approach between them is considered to be a network, where the
“relationships are held together by collaboration, communication, trust and
mutual advantage” (Hogg, 2012). This relationship is expanding: the parties
know each other quite well and are prepared to commit more and become
increasingly interdependent.

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Montagu Place relationship with its Distributors
Slide 11
The level of the relationship between MP and its distributors is defined as
“accountable”: at this level, MP and the distributors make sure that the
exchange went well and there were no problems. However, rarely they work
together to improve customer satisfaction and to refine the quality of their
relationship. A part from a few of them, for MP the relationship life cycle with
its distributors is in an early stage (exploration): here, terms and conditions are
already set up, but other negotiations can still be carried on. This relationship is
mainly based on information and communication technology; all the
interactions happen through digital platforms, email, telephone and meetings
are organised just sporadically.

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TASK 3 - REPORT
How MP can start building a better relationship with its employees.
SUMMARY
This report analyses and evaluates the changes that MP should operate to establish a better relationship
with its employees. Moving from the employees’ mission and their ethical values, it is suggested how the
MP current marketing mix should be adapted to meet the employees’ needs and facilitate/support their
commitment to corporate social responsibility and towards ethical issues.
Each change identified is assessed in order to check whether any adverse effect may affect MP guests and,
on the contrary, whether the impact of these changes could give MP any competitive advantage.
This report identifies also what challenges are faced when suggesting and operating these alterations to the
Organisation’s marketing mix.
INTRODUCTION AND EXPLANATION OF THE MAIN MISSION/VALUES OF MP EMPLOYEES
Why employees are considered the most important stakeholder group for MP? There are at least two
reasons, identified below:
• The employees of MP bring a crucial contribution to the final service outcome and, being
empowered by the management, they feel a strong desire to participate and contribute to the
success of the Hotel (Table 1 of the audit). The relationship between them and MP is based on
elements such as trust, commitment and mutuality; they are considered by the Company customers
themselves, with special needs and wants (Table 2 and 3 of the audit).
• Employees, in the hospitality sector, are seen as the most important factor in creating and adding
value: it has been said that “employees are responsible in reinforce the brand and bring attributes to
the job” (Jones, 1986:201) and “the most important element of the hospitality product is the
manner of service and not the tangible product such as an hotel room” (Lewis, 1989:30). The
relationship approach held by MP towards its employees (internal customer relationship, as shown
in Table 2) is the key of success in the hospitality field: the fact that employees are considered
internal customers means that “if they are satisfied with their job, they in turn will be able to satisfy
the external customer” (Haemoon, 2008:476).
The reasons above explain why a better relationship between MP and its employees result in a better
relationship between MP and its guests. This statement is supported also by the idea that, within the
tourism service, “value is considered a very important component of the consumer decision-making process
and has been recognised in the literature as one of the most determinants of purchase intentions and repeat
purchase behaviour” (Tsiotsou and Goldsmith, 2012:147).
In order to start building a better relationship with its employees, it is necessary for MP to recognise their
mission/values and any interest they have in corporate social responsibility. They are listed below:
• MP’s employees, being part of a small group, want to be involved in the management activities or,
at least, they want to be fully aware of them.
• They want to enhance their career and develop skills. They strive to provide an excellent service and
feel completely committed to MP objectives; at the same time though, they seek to use MP as a
launch pad for further future experiences in the same business field.
• They embrace entirely their Organisation’s mission: welcoming the guests in a world of great
hospitality at terrific value. They need to get professional satisfaction and economic rewards.

21
• Employees want MP to communicate honestly and fairly with its customers, so as the staff will have
to handle less complaints and will do their job with ease. “Violation of marketing ethics occurs when
products or services are described dishonestly or with a high level of exaggeration of the expected
outcomes for the buyer” (P. Kotler, cited in Wayne, 2010:280).
• Employees want to work in a safe, clean and equipped work environment.
• Employees want to be motivated.
• MP’s employees seek to integrate themselves in the local community and feel part of it. They want
their Organisation to participate to charity events, to support charities and organise social activities.
RECOMMENDATIONS FOR CHANGES TO THE MARKETING MIX
Considering the above and what has been already done for the employees in terms of marketing mix (Table
3 of the audit), following are suggestions that enable MP to respond more extensively to its employees’
needs. All the changes suggested take into account the necessity to have no adverse effect on MP guests.
• Product: Every Monday, a member of the staff doing the early shift (8am-4pm) should be given an
extra hour (paid regularly) and should carry out the weekly competitors report. Each member of the
front desk staff should be able to make at least a weekly competitors report within three months.
This is to respond to the employees’ need to be more involved in the management activities.
Appraisals will be organised once every three months to check employees’ knowledge improvement
and willingness to carry on/stop learning.
• Price: Two more days of paid holiday should be added each year for each employee. Rather than
responding to a specific need, these actions aim to sustain the sacrifice that the employees are
supposed to pay in terms of working hours, shifts, week-ends and bank holidays at work.
• Place: Considering the need to work in a safe work environment, the number of accidents has to be
reduced by at least 50% in the next 6 months. It has to be ensured the work environment is safe and
all the equipment used is checked and maintained regularly.
Each employee should have the possibility to spend one complimentary night sleep at MP every
three months. This is to increase the knowledge of the product sold and fulfil their need for
embracing their Organisation’s mission, providing excellent service.
• Promotion: Rewards (a £10 voucher should be issued each time an employee’s name is quoted in a
positive review in TripAdvisor).
A bonus scheme was already set up (Table 3 of the audit). An email showing the achievements
obtained and the targets to be achieved should be designed and sent every month to each member
of the staff. This is to make the employees more aware about their ongoing performances.
• Physical evidence: Information about absence of lift and 4 rooms located in the lower ground floor
should be put immediately in MP website and all the Online Travel Agencies websites. Doing so, the
number of complaints regarding the lack of lift and rooms located in the lower ground floor has to
decrease by 30% in the next six months. This action responds to the employees’ needs to show/offer
their guests what had been actually sold to them before the arrival at the Hotel.
• People: One team building activity should be organised every quarter.
A charity committee should be created within the end of next month; a charity should be chosen
and supported by MP and each employee will be encouraged to take part either to a charity event
(run for example) or to volunteer with local charities.
• Process: Online trainings about discrimination at work and food waste should be set up. These
should be completed by each employee within two months. Interpersonal interactions are part of
the processes at work and involve not just employees and customers, but also, equally, employees
among themselves. Likewise, providing meals, food waste represents another sensible issue to
effectively deal with during the day to day activities at the Hotel.

22
EVALUATION OF THE IMPACT ON THE RELATIONSHIP BETWEEN MP AND ITS EMPLOYEES
For each element of the mix, following is an evaluation of the impact that the changes recommended above
will have on the relationship between MP and its employees. It is also assessed their potential to give MP
any possible competitive advantage.
• Product: The actions suggested above are intended to enlarge employees satisfaction, engagement
and involvement. “Satisfaction has been defined as a pleasurable or positive emotional state
resulting from the appraisal of one’s job; satisfaction is all about what the organisation does for
employees to make them feel good about being there” (Macey, 2009:40). Besides meeting its
employees’ needs, MP is also able to get a competitive advantage, as engaged employees give
more than what they have to offer. Making them more engaged, MP can expect its workforce to be
more productive, to invest more psychic energy in their job and provide a better service to the
guests.
• Price: By giving two more days of paid holiday a year, MP improves the relationship with its
employees creating a pleasant work environment. Haemoon (Haemoon, 2008:480) states that two
theoretical constructs such as organisational culture and climate “are fundamental to any successful
hospitality and tourism operations as they shape the employee’s performance and perceptions”.
Even in this case, MP can benefit from having a happier and more motivated workforce, being then
able to provide a better service.
• Place: The changes proposed respond to the employees’ need of avoid unpleasantness, working in a
safe place and of embrace their Organisation’s mission. The impact of these ethical and responsible
changes will result in an improved sense of mutuality between MP and its employees.
Allowing the employees to spend a few nights at MP, will give them a better knowledge of the
product they sell and will give them confidence in welcoming their guests and explaining them the
facilities offered by MP. Therefore, the competitive advantage for MP is that guests enquiring
directly for a booking will be well informed and will be more likely to proceed with the reservations.
• Promotion: These actions aim to reinforce the willingness (of MP and employees) to develop a co-
operative behaviour between them. Being treated as internal customers, the employees are
rewarded for their loyalty and it will be more likely to reach high levels of employee retention.
These changes may well lead to competitive advantage: MP can use the rewards to foster a service
culture and, retaining its own employees, MP can save on the cost of recruiting new workforce and
training it. Furthermore, “long-term employees are often able to form personal relationships with
customers, through repeated contact. This interpersonal contact, and the building of trust, may be
a factor in customer loyalty” (Hogg, 2012:242).
• Physical evidence: The transparency of MP represents a key driver for the relationship with its
employees. This is because employees represent the “face” of the Hotel and they want MP to be
honest so as to establish a relationship based on trust with their guests. Guests, informed in
advance, will not be disappointed for the absence of lift or for being allocated in a room in the lower
ground floor. That will reduce the number of complaints and improve the quality of the feedbacks
and the word-of-mouth.
• People: These activities aim to strengthen boundaries among colleagues and between employees
and the community. Consequently, even the relationship between MP and its employees will be
reinforced. A stronger sense of loyalty will be felt by each member of the staff towards MP. Again, a
happier and more involved staff will result in a better service provided by MP.
• Process: Providing online trainings will allow PM to reinforce its relationship with its employees, by
increasing their self responsibility. Employees have the chance to develop their personal skills and
competences, while MP reaps the benefits of a more competent workforce. Sloan (Sloan et al,
2009:123) explains how and why trainings (in this case specifically about environmental
sustainability) should be offered: “environmental trainings should be regularly conducted, be
enjoyable as well as involve and motivate staff in order to achieve best results. Once environmental

23
data on special projects is available, targets for staff should be set in special training sessions and
feedback should be given thereon”.
CHALLENGES FACED IN GAINING ORGANISATIONAL SUPPORT AND FUNDING
Some of the recommendations proposed may cause inconveniences in terms of organisational support and
funding. Some others will not. Referring to all the changes above, here is a table that identifies all the
challenges that may be faced by MP.
Changes Organisational support Funding
Product A training session has to be organised for all the members
of the front desk. Firstly, they have to be explained how to
make the report, then they can start working on it.
52 additional working hours per year will have to be paid
(one hour a week). This will result in a cost of £429 per
year.
Price Lack of staff has to be avoided as each employee will be in
vacation for 2 additional days per year.
160 additional working hours per year will have to be paid
(each of the 10 employees will have additional 16 holiday
hours a year). The cost is £1.320 per year.
Place High levels of compliance with Health and Safety
regulations have to be expected. Everything has to comply
with health and safety regulation so as to minimise any
harm to members of the staff and public.
5 rooms every 3 months will be decommissioned to allow
each member of the front desk (5 employees) to sleep
over the Hotel. Sunday may be the preferred night as
generally the occupancy is lower than week days.
No major issues in terms of funding should be faced to
comply with health and safety regulation.
Challenges may arise for decommissioning 5 rooms every
3 months. Employees’ stays at the Hotel have to be
planned in advance and this may cause loss of revenue.
However, this represents an element of uncertainty, since
no one will ever know if the room decommissioned would
have been sold to a paying guest.
Promotion Employees may be too pushy in inviting the guests to
leave a review and quote their names in TA (this is against
TA regulation and against professionalism).
An average of 5 vouchers (worth £10 each one) are
expected to be given each month. This makes a total of 60
vouchers for a cost of £600 a year.
Physical
evidence
This ethical practice will be likely hampered by the
Company as it may prevent some potential customers to
make reservations.
Potential loss of revenue due to missed reservations.
People MP has to find someone to cover the front desk and
kitchen while the team building activities are carried out.
Being part of a group of hotels located in London,
someone can be easily called.
A member of the staff at MP has to be designated to be
part of the committee. A meeting has to be organised with
members of other hotels and information about charities
and activities in London has to be gathered.
A budget of £15 per person is necessary for each team
building activity. Every quarter the expenses are then
£150. The cost per year is £600.
Guests will be asked for donations to contribute for
charitable collections; however, MP will pay the fees for
charity activities and events. The budget expected to
cover all the expenses is £500 per year.
Process Approved trainings providers will have to be contacted to
get quotations and set up the online platform for MP
employees. Each employee will have to receive log-in
details.
Access to online training platforms implies a cost of £350
for each course. Total cost for both courses: £700.

24
References
Bourne, L., 2009. Stakeholder relationship management: a maturity model for organisational
implementation. Burlington: Ashgate
Dwyer, F.R., 1987. Developing buyer-seller relationships in Journal of Marketing No 62
Eden, C. and Ackermann, F., 1998. Making strategy, the journey of strategic management. London: SAGE
Egan, G., 1984. Working the shadow side: A guide to positive behind-the-scenes management. SF: Jossey-
Bass
Freeman, R.E., 1984. Strategic management: a stakeholder approach. Boston: Pitman.
French, J. and Raven, B., 1958. The bases of social power in Studies in social power. Cited in Hobb, 2012.
Haemoon, O., 2008. Handbook of hospitality marketing management. Oxford: Butterworth-Heinemann
Hogg, B., 2012. Stakeholder marketing. London: BPP
Jones, P., 1986. Internal marketing. International Journal Hospitality Management, 5
Kotler, P., Armstrong, G., 2014. Principles of marketing. 15th
ed. London: Pearson.
Lewis, R.C., Hospitality marketing: the internal approach. Cornel Hotel and Restaurant Administration
Quarterly
Macey, W.H., 2009. Employee engagement: tools for analysis, practice and competitive advantage. Malden:
Wiley
Martin, C., Payne, A. and Ballantyne, D., 2002. Relationship marketing: creating stakeholder value. Rev. ed.
Oxford: Butterworth-Heinemann
Mendelow, A., 1985. Stakeholder analysis for strategic planning and implementation. New York: Van
Nostrand Reinhold.
Sachs, S., Ruhli, E. and Kern, I., 2009. Sustainable success with stakeholders. New York: Palgrare
MacMillan
Sloan, P., Legrand, W. and Chen, J.S., 2009. Sustainability in the hospitality industry. Amsterdam – London:
Butterworth-Heinemann / Elsevier

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Tsiotsu, R.H. and Goldsmith, R.E., 2012. Strategic marketing in tourism services. Bingley: Emerald
Wayne, V., 2010. The A-Z of corporate social responsibility. Chichester: Wiley

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COMPANY BACKGROUND
Montagu Place Hotel is a 4 star Hotel situated in central London, Marylebone. MP was established 8 years
ago, when an existing hotel was taken over and refurbished completely.
MP has 16 rooms, divided into 3 categories: Comfy Standard rooms, Fancy Executive rooms and Swanky
Deluxe rooms. Like any other boutique hotel, MP offers luxury facilities and its décor and ambience are
recognised as stylish and intimate.
The management structure inside the Hotel is simple: the General Manager refers to the Head Office and is
the ultimate responsible person for the managerial activities of planning and controlling the business. The
Deputy General Manager is the connecting point between the management and the two teams that follow
the day-to-day activities at MP: the front desk team (5 members) and the housekeeping team (5 members).
MP is a home away from home for all its guests. All the objectives derive from its mission: “welcoming our
guests in a world of great hospitality at terrific value”. Operations are carried out responding to a company
philosophy that considers 5 main values: customer service, communication, working together, team
development and community.
Tight relationships tend to be established not just between the Hotel and its guests but also within the staff
and with all the connected stakeholders. MP provides that kind of “never say no” service: the guest is
acknowledged since before they enter the main door and looked after personally throughout their stay.
Among other facilities, MP provides breakfast prepared in house and meals from a local Thai restaurant.
MP in the year from 1April 2013 to 31 March 20141
made a profit of £215K on turnover of £900K. The main
sources of revenue are: room sold (£845K); food and beverage (£50K, where it is considered also the
meeting room hire); other (£5K). During the same period of time, MP registered a level of occupancy of
90.54%; the net average room rate is £157.30 and the net revenue per room available is £142.42. A total of
8121 sleepers stayed at MP in the year.
Competition in the neighbourhood is fierce: in 0.5 mile radius are located many luxury hotels in the same
price range and new ones are being established. Among the others, MP competes also with Hilton.
Sources of reservations are: online travel agencies, travel agencies that use the GDS (global distribution
system); direct channels such as the website, social networks, telephone, email, walk-in; organisations
located in London that negotiate corporate rates for their employers with MP. Other pressure
groups/opinion leaders/dedicated press (as for example Trip Advisor) may guarantee a direct contact with
the Hotel.
Through the OTA (online travel agencies) comes the 32.09% of the reservations; the GDS brings the 5.52%
of the total of the bookings; through direct channels MP gets 39.12% of those and, finally, organisations
based in London account for the 23.27% of the rooms sold.2
3 major profiles of guests can be identified: there are the ones staying for business purposes, travellers in
holidays and guest visiting London for pleasure (weekenders). There is also a tiny segment represented by
family visitors who have relatives or friends in the neighbourhood.
The business segment accounts for about the 45% of the total of the guest staying over the year; the rest
consists of travellers being in London for holidays, pleasure or visiting.3
Each segment is really different from one another in terms of wants and needs and each group interacts
with PM in a different way.
1
Internal data (profit and loss account): the last two months are based on forecast and projections.
2
Internal data (booking source report – period between 1 April 2013 and 19 March 2014).
3
This is an estimate obtained by adding the percentage of guests having a corporate rate and the percentage of solo travellers
(generally staying for business purposes).

Stakeholder marketing - June 2014

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