Chapter 2 Service Characteristics of Hospitality and Tourism Marketing

Marketing services are different from marketing goods.

Chapter Objectives
Describe a service culture Identify four service characteristics that affect the marketing of a hospitality or travel product Explain marketing strategies that are useful in the hospitality and travel industries
2

Key Concepts
Service Culture Intangibility Inseparability Variability Perishability Internal marketing Interactive marketing Managing differentiation Managing service quality Tangibilizing the service product Trade dress Physical evidence Point of encounter Managing perceived risk Managing capacity and demand Managing consistency
3

The Service Culture

Service Culture: A culture that supports customer service through policies, procedures, reward systems, and actions. Service culture can be implemented: Through employee communication Through company policies Through personal actions Empowers employees to solve customer problems. Has to start with top management and flow down. Organizations culture must support and reward customer need attention. Ritz Carltons Gold Standards
4

Characteristics of Service Marketing

Intangibility Intangibility Inseparability Inseparability Variability Variability Perishability Perishability

Cant be seen, tasted, felt, heard, or smelled before purchase. Cant be separated from service providers. Quality depends on who provides them and when, where and how. Cant be stored for later sale or use.

Intangibility
Services can not be seen, tasted, felt, heard, or smelled. Tangible evidences reduce uncertainty High risk associated with services. Lack of tangibility after the experience Companies should create memorable guest experiences Tangibles provide signals as to the quality of the intangible service. Exterior and Interior design Uniforms of employees
Someone who purchase a service may go away empty-handed, but do not go away empty-headed - Robert Lewis

Tangible and Intangible Products/Services

Pure service; no tangible good

Pure tangible good; no service Milk

Hybrid: Tangible equal part goods with goods and service some services Computer Meal at & Warranty Restaurant

Major service with minor good

Hair Styling

Legal Advice
7

Inseparability
Customer-contact employees are part of the product Other customers become part of service The employee becomes part of service The customer and the employee interact with the service delivery system. Customers and employees must understand the service delivery system. Select, hire and train customers. Select and train contact employees Empower employees

Variability
Services are highly variable Services are produced and consumed simultaneously. Service consistency depends on the service providers skill. Fluctuating demand makes it difficult to deliver consistent quality. Lack of consistency a major source of customer disappointment. Guest expectations are different. Train contact and non-contact employee

Quality can not be controlled; must be produced

Perishability
Lack of ability to inventory Lack of ability to inventory services can not be stored
Capacity and demand must be successfully managed If services are to maximize revenue, they must manage capacity and demand. Change customer use pattern (Hourly, daily, seasonally) Cross-train employees Involve customer in the service delivery system
10

Management Strategies for Service Business

Service firms use marketing to position themselves strongly in chosen target markets. In a service business the customer and frontline service employee interact to create service Service providers must work to interact effectively with customers to create superior value. Successful service companies focus their attention on both their employees and customers.
11

Management Strategies for Service Business

External marketing = company and customers Internal marketing = company and employees Interactive marketing = employees and customers

12

Internal Marketing
Internal Marketing:
The task of training and motivating employees to provide good customer service. * Customer contact employees * Supportive employees Employees are a critical part of the product and marketing mix There is a need for internal and as well as external marketing.

13

Interactive Marketing
Interactive Marketing: Perceived service quality depends heavily on the quality of the buyer-seller interaction during the service encounter. Service quality depends on both the service deliverer and the quality of the delivery The customer judges service quality not just on technical quality (the quality of the food) but also its functional quality (the service provided in the restaurant).
14

Management Strategies for Service Business

1. Managing differentiation Need to develop a differentiated offer, delivery and image. Offer innovative features Airlines offer in-flight movie, advance seating, frequent flyer award programs QSR offers fast delivery services Differentiate service delivery through: People Physical environment Process
15

Management Strategies for Service Business

2. Managing service quality Delivering consistently higher quality than its competitors The key is to exceed the customers service quality expectations Identify the expectations of target customers
Empower frontline employees Develop a set of common virtues for service quality Set high service-quality standards. Watch service performance closely (own and competitors).
Promise only what you can deliver and deliver more than you promise
16

Management Strategies for Service Business

3. Tangibilizing the service product Promotional material, Employees appearance, and uniforms. Physical environment Building exteriors Equipment Furniture and fixture Signs
17

Management Strategies for Service Business

4. Managing the Physical Surroundings Physical evidence that is not managed properly can hurt a business. Poorly managed physical evidence sends negative messages to customers. Physical surroundings should be designed to reinforce the products position (organization image) in the customers mind.
18

A Fishy Sign Story

NOW HIRING CLOSERS

19

A Fishy Sign Story

NOW HIRING CLOSERS Oops!! The C dropped off. NOW HIRING LOSERS

20

Management Strategies for Service Business

5. Managing Employees as Part of the Product In H&T employees are critical part of the product and marketing mix Human resources and marketing departments must work together The management should formulate policies that support positive relations between employees and guests. Must manage service at the points of encounter (R.Nykiel)

21

Management Strategies for Service Business

6. Managing Perceived Risk Customers experience some anxiety before they purchase hospitality and tourism services A salesperson must reduce client fear and gain the clients confidence. FAM trips and sampling help alleviate anxiety Hotels provide, rooms, food, beverage, and entertainment at no cost to the prospective client. Customer loyalty increases for companies that have provided a consistent product in the past.

22

Management Strategies for Service Business

7. Managing Capacity and Demand Hospitality and tourism companies must adjust their operating systems to enable them to operate at maximum capacity. Complaints tend to increase when companies are operating at full or near to full capacity; companies must remember that their goal is to create satisfied customers.
23

Management Strategies for Service Business

8. Managing Consistency Consistency is one of the key factor in the success of a service business. Basically, this means that customers receive the service they expect without unwanted surprises. Many factors work against consistency % 100 satisfaction guarantee Brand consistency
Product consistency Price consistency Procedure consistency Service consistency Taste consistency Time consistency
24

Management Strategies for Service Business

9. Managing the Customer Relationship (CRM)
CRM is a managerial philosophy and practice It combines marketing, business strategy, and information technology to better understand the customers, to custom-developed products for key customers CRM focuses on managing revenue opportunities from customers, retaining customers, and enjoying a stream of income from them over their lifetime. Managing Switching Costs
25

Next Chapter
The Role of Marketing in Strategic Planning

26