COST AND MARKET ORIENTATION

It is convenient at this point to discuss the distinction between cost and market orientation within the hotel and catering industry,as these two terms two are closely associated with the particular sectors of the industry that have been identified.Example of cost orientation are identified in the industry particularly in the welfare sectors such as catering in persons,for patients in hospitals and often for in house,employee feeding restaurants,whilst market orientation examples are found in the hotels,restaurants,popular and fast food sectors,


A market-orientated business displays the following characteristics:-

a) A high percentage of fixed cost,e.g rent,rates,management salaries,depreciation of buildings and equipment.This high percentage of fixed costs remains fixed regardless of any changes in the volume of sales.Operation with high fixed cost are hotel restaurants and quality commercial restaurants.

b) A greater reliance on increases in the revenue rather than decreases in costs to contribute to the profit levels of the establishment.The implications of this characteristics for management are that in seeking to increase the business profitability,more emphasis must be given to increasing sales.

c) An unstable market demand for the product,therefore requiring a greater emphasis on all forms of selling and increasing of the product.