Jambojet customers disembark from its aircraft. The budget carrier has gained popularity among travellers for its no-frills marketing model. PHOTO | FILE
What you need to know:
Marketing model is becoming popular as companies efficiently deliver what their clients want.
International hotel chain, Tune Hotels, announced this month that it will be opening a string of low budget, no frills hotels in Kenya where customers only pay for the amenities they use.
“Most times you will drop down to the restaurant to grab a meal and not even think about using room service. We do not want to charge you for these amid other things you do not use – so we have done away with many of them,” said Stuart Clay, general manager, Tune Hotel - Nairobi.
The hotel’s no frills model, now a staple in developed markets, will be targeting local, foreign and corporate back-to-back travellers in Kenya; travellers who need solid, quality accommodation, but who are not interested in paying the extra for a lifestyle or luxurious experience. The hotel chain is also engaging local and foreign companies who host events and clients in the country.
However, to attract customers to a new brand built on low pricing, marketing will be key. “If a budget brand is not marketed properly consumers could view it as a low quality product,” said Samuel Munene, the market research manager at Crack a Business.
“Consumers will spend on a budget product if it offers a better and affordable alternative while at the same time filling a gap in the market.”
Tune Hotels will offer quality accommodation as well as value for money, the management said citing the current demand for decent budget hotels as a perfect opportunity for them to enter the market.
“The potential for budget hotels is big and the supply does not currently meet this demand,” said Joe Stenson, the Director, Tune Hotels, UK.
Across sectors, the opening of the Tune Hotels will mark only the latest expansion in the no-frills model. In the air transport industry, the country now has several budget airlines, including Jambojet and Fly540, which have enjoyed a solid take up.
One of the reasons budget brands have proven a winning model globally is because they mainly focus on what the consumer wants and deliver it.
“Successful price warriors stay ahead of bigger rivals by using several tactics: They focus on just one or a few consumer segments; they deliver the basic product or provide one benefit better than rivals do; and they back everyday low prices with superefficient operations to keep costs down,” said Nirmalya Kumar, a professor of marketing, in an article titled Strategies to Fight Low-Cost Rivals’ in the Harvard Business Review.
In the case of Tune Hotels, this set of priorities is seeing it invest heavily in security, as a practical and essential part of what they are offering.
Budget brands also succeed in a market where a large percentage of the consumers are price aware. “They are more effective in a market where there is a large pool of price aware consumers as opposed to price sensitive or price insensitive consumers,” said Mr Munene.
“These are consumers who need a particular service or product but expect to pay a ‘ decent’ price for it. Price sensitive consumers have price as their main consideration and are ready to sacrifice much more in order to get a bargain. Price aware customers want to enjoy above average service/ product but at a fair price. In Kenya, the consumers are becoming more price aware.”
And as consumers become price aware, it could lead to other companies coming up with budget brands in a bid to increase their market share.
-African Laughter
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