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Creating new market space for San Diego's hospitality industry

Until such time that San Diego has meaningful marketing dollars to promote this great destination, the marketing message must be compelling and the target must be hit like a laser beam. Competitive strategy is required to be thoughtful with action plans that are both effective and edgy to attract enough attention. According to the book, "The Strategy Focused Organization" by Kaplan and Norton, there are four basic strategic themes. My comments follow each of the four themes:

  • Build the franchise: In the case of San Diego hoteliers, this applies to the individual organizations like the San Diego Convention & Visitors Bureau (ConVis), San Diego North Convention & Visitors Bureau (SD North ConVis) and the San Diego Convention Center Corp. (SDCCC)

  • Increase customer value: Today's savvy customers may pay to stay in a luxury hotel in San Diego, but they will require perceived value for that dollar and they will shop for it aggressively.

  • Achieve operational excellence: Satisfactory service is not good enough with today's fickle consumer. Great service is now required, and that means esprit de corps among all tourism industry organizations.

  • Be good corporate citizens: This comes back in the way of increased revenues and more repeat business.

    Positioning strategy

    To market head-to-head, it is paramount to create a grid of qualities comparing San Diego with the competition. For destinations, I'd rank location vis a vis direct air service, climate, arts and culture, restaurants, nightclubs, convention and meeting space and the overall amenity package like retail, spas, gaming, golf, attractions, et cetera. I like to apply certain "weighting" of the results, such as a higher weight or importance for climate, than for nightclubs or restaurants. When the differences in attributes are apparent, then one may select certain differences to promote via communications strategy.

    Naturally, these attributes must be evaluated as the product goes through its natural lifecycle. A new convention center is probably not deemed to be "new" by its fourth year of operations and will require new positioning strategies. Each stage in the product lifecycle, such as introduction, growth, maturity and decline has a different strategy requirement, according to Philip Kottler in Marketing Management. Where is San Diego? We are probably in the growth phase - well-introduced but not quite mature as we morph from a sleepy Navy town into a true "cool, 24/7 city" with a growing biotechnology and communications technology base.

    The following grid explains Kottler's strategy for product, price, distribution, advertising and sales promotion:

    Strategies

    Introductory phase

    Growth phase

    Maturity phase

    Decline phase

    Products

    Offer a basic product

    Product extensions

    Diversify brands

    Phase out weak models

    Price

    Charge cost plus

    Penetrate market

    Match competitors

    Cut price

    Distribution

    Build distribution

    Intensify distribution

    More intensity

    Phase out unprofitable outlets

    Advertising

    Build awareness (among early adopters)

    Build awareness (among mass market)

    Stress brand differences

    Retain loyal only

    Sales promotion

    Heavy promo (entice trial)

    Reduce promo

    Encourage brand switching

    Minimum promo

    Creating new market space

    "Competing head-to-head can be cutthroat," according to W. Chan Kim and Renee Mauborgne in their Harvard Business Review article, "Creating New Market Space." This concept requires a different pattern of strategic thinking that finds unoccupied territory that represents a real breakthrough in value. One concept the authors refer to is concentrating on users as opposed to buyers or purchasers. This changes the dynamic of marketing from "head-to-head" to "creating new market space."

    Most destinations that have limited resources must concentrate on the decision makers they can reach. However, today's users are sophisticated and make their own decisions based on everything from blogs like tripadvisor.com or other forms of "viral marketing." With the limited dollars that our destination now has, it makes sense for us to concentrate on this avenue. The good news is ConVis is already doing some of this with an ahead-of-the-curve Web marketing program. SD North ConVis gets incredible bang for the buck with guerilla marketing, and SDCCC consistently delivers superior professional service.

    What are the dynamics of destination competition? We have very little money relative to our competitive set. We have three outstanding organizations -- ConVis, SD North ConVis and SDCCC -- promoting very distinct markets.

    As can be seen from the grid, we do not have the resources to "penetrate the market, intensify distribution and create mass-market awareness." The key will be to create new market space and raise more marketing dollars at the same time. That will require hard work and teamwork. We must work together to win the market share war and creatively develop new market space.


    Rauch is chairman of the San Diego Hotel and Motel Association and vice chairman of San Diego North Convention & Visitors Bureau. He also serves on the board of directors for San Diego Convention Center Corp. and teaches entrepreneurship at San Diego State University. He can be reached at robert.rauch@sddt.com. Comments may be published as Letters to the Editor.

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