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Question 1.1

1

The net customer revenue has been computed to be $735.00 and the net customer profit is $208.60 respectively. Based on the hotel’s profitability objective of $200, they have achieved their objective. The bulk of the hotel’s revenues are generated from “satisfied” customers. The hotel should be aiming to increase customer satisfaction level from “somewhat satisfied” to “satisfied” because there is a huge gap of customer revenue in between and a better margin although at a slightly more retention cost. Also, the hotel needs to increase customer satisfaction level from “satisfied” to “very satisfied” because the this bracket of customers gives the highest amount of revenue with the best profit margin. The net customer revenue is only $735, less than half of the revenue by “very satisfied” customers.

2a.

The calculations provided the investment in hotel ambience and staff training for customer profits are $290.76 and $278.86 respectively. Unfortunately, both strategies are unable to meet the target of $300. Both strategies only increase margin of very satisfied customers by 5%, which is insufficient. The gross profits have also increased leading to increase of customer profits but the focus is only on “very satisfied” and “satisfied” customers. The hotel needs to also focus on either reducing the lower brackets of unsatisfied customers or to push them up to become satisfied customers in order to meet their objective of $300 customer profits.

2b

Based on the SERVQUAL model, customer’s perception of service quality depends on five factors and one of them is known as ‘tangibles’. Tangibles refer to the physical facilities, equipment and even personnel appearances. It has been proven that the better the tangibles, the ...

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...eness and Price OK stage. Losing customers in the awareness stage shows that the promotions done for Cracker is either inappropriate or it is targeting the wrong channel. HP needs to target the correct target market using the right way, such as using social media to target the younger group for computers. Losing customers in the Price OK stage shows that the pricing strategy adopted is also not efficient. They might be over pricing their products in relative to competitors and need to readjust the pricing.

3.

Based on the calculations, the increase in Price OK and Intent to Buy are 6.93% and 6.38%. It is obvious that increasing Price OK is better because it yields higher market share index. This is due to the ripple effect caused by the changes. When changes are made at the lower level, the upper levels such as intent to buy and purchase receive more increases.