Managing Service Product

Week 2
 Objectives
• Definition product and hospitality product
• Explain product level
• Explain four service characteristics
• Explain product development
• Explain product life cycle

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
“Managers do not control the quality of the product when the product is a service . . . .
The quality of the service is in a precarious state –
it is in the hands of the service workers who ‘produce’ and deliver it.”

-Karl Albrecht

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
What is a Product?

A product is anything that can be offered to a market for attention, acquisition,

use, or consumption that might satisfy a want or need.

It includes physical objects, services, places, organizations, and ideas.

The hospitality product

• The combination of goods, services, environment and experience that the

consumer buys
• Differences between services and manufactured goods
The Hospitality Product

Exhibit 2-9; The Hospitality Product model

The Hospitality Product
• Physical product
• The tangible component of service
• Service environment
• The physical environment in which the service is delivered
• Surrounding area
• Layout
• Signs and symbols
• Service Product
• The core performance or service purchased by the patron
• Service delivery
• What happens when the customer actually consumes the service
The Hospitality Product
Product Level

2. Facilitating
1. Core Products
Products

4. Augmented
3. Supporting Products
Products
 1. Core Products

• What is the customer REALLY buying : Buying a Benefit

• NOT as Plane ride, hotel room, taxi, food…OR Cultural enrichment, lifelong memories,
a return to one’s roots, adventure, romance…
• “Don’t sell the Steak, sell the Sizzle”
 2.
Facilitating Products

• Services or goods that must be present for the guest to use the core product
• Check-in and check-out services, business center, restaurant, valet…
• Facilitating products for one market segment may be supporting products for another
• Core products require facilitating products but DO NOT require supporting products
• Supporting products are extra products offered to add value to the core product and help to
differentiate it from the competition
• Supporting products offer a competitive advantage, only if they are properly planned and
implemented

• In-room ipod
• Full service spa
3. Supporting
• Hyatt bathroom amenities Supportingfacilitating
Products
• Family don’t require valet and restaurant, but business clients do
• Bob Burns and Regent Int Hotels: oversie bathroom, shower products
• Jogging at the Swiss hotel
 4.
Augmented Products

• The augmented product includes accessibility, atmosphere, customer

interaction with the service organization, customer participation, and
customers’ interaction with each other
• These elements combine with the core facilitating and supporting
products to provide the augmented product
• What is offered + how it is delivered
 Augmented Product:
Accessibility
• If a product is not accessible it has no value
• Two barriers are hours of operation and lack of knowledge
• Products must be accessible when the guest wants to use them
 Augmented Product:
Atmosphere
• The Physical Environment
• Atmosphere is a critical element in services
• It can be the customer’s reason for choosing to do business with an establishment
• Atmosphere is appreciated through the senses
• Sensory terms provide descriptions for the atmosphere of a particular set of
surroundings
• Bright lights, loud noises, crowds, movement, bright colors
Atmosphere:
Customer Interaction with service delivery system

Joining Consumption Detachment

Pre Encounter Encounter Post Encounter

 Atmosphere:
customer interaction with other customers

• Construction worker sitting in first class on overbooked flight

• Large GITs in same area as FIT
• Shangri-La Hotel in Singapore has 3 separate buildings
• Skiing culture vs snowboarding culture
 Characteristics of Service Marketing

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
 Services Versus Goods
Tangibility Spectrum
Salt
 Soft Drinks

 Detergents
 Automobiles
 Cosmetics
Fast-food
 Outlets

 Intangible
Dominant

Tangible
Dominant 
Fast-food


Outlets
Advertising

Agencies
Airlines
Investment


Management
Consulting
Teaching
 New product development process

Concept
Idea Idea Marketing
Development
Generation Screening Strategy
and Testing

Business Product Test

Commercialization
Analysis Development Marketing

• Companies need to continually develop new products

Idea generation

External Internal Sources

Environment
Idea Generation
External Sources Crowdsourcing
 Idea generation
• External Environment: All members of the hospitality industry are highly dependent on the external environment
• Recession, inflation, economic growth, terrorists, an aging population, and other external factors all directly affect this industry
• Internal: TGIF Fridays and Whataburger (own test kitchens at corporate HQ, try out 5 new items a year, good ones
become permanent)
• -- casual dining restaurants try out about 15 per year
• External sources: distributors, suppliers, competitors, trade magazines, marketing research firms, university and
commercial labs
• Crowdsourcing: invites broad communities of people into the innovation process – customers, employees,
independent researchers, the public at large
• -- web communities
 Idea
How will the product help us: Screening
• Fulfill our mission
• Meet corporate objectives
• Meet property objectives
• Protect and promote our core business
• Protect and please our key customers
• Better use existing resources
• Support and enhance existing product lines
 Concept
Development
and Testing

• Product Idea: envisions a possible product that might be offered to consumers

• Product Concept: detailed version stated in meaningful terms
• Product Image: the way consumers picture an actual or potential product
 Concept development: case of courtyard by marriott

• Urban market becoming saturated, so decided to utilize core lodging business to create new product for secondary sites
and suburban locations  Product Idea
• Marketer’s job is to develop this idea into alternative product concepts, determine the attractiveness of each, and choose
the best one
• Conducted research to outline a conceptual framework and product image
• Focused on transient market
• Less than 150 rooms
• Residential image
• No significant cannibalization of other Marriott brands
• Limited-menu restaurant
• Limited public and meeting space
• Standardized product with 5-8 per region
• Marriott “halo” effect
Concept Testing
• Conducted within a group of target
consumers
• Word or picture descriptions, attitude
surveys, ranking configurations
 Marketing
Strategy

• 1. target market, product positioning, sales goals, market share goals, profit goals for
first few years
• 2. planned price, distribution, marketing budget for the first year
• 3. long-run planned sales, profit goals, marketing mix strategy
 Business
Analysis

• Review of sales, costs, profit projections to determine whether they satisfy company
objectives
• Sales forecast
• Cost estimates: from R&D, operations, finance, accounting departments
 Product
Development

• Make one or more physical prototypes

• Guest room prototypes, menu items run as
specials
• Courtyard Marriott: Standard, short and
narrow room prototype
 Test Marketing

• After passing functional and consumer tests

• Introduce product into real market settings
• Gain experience, find potential problems, learn what more info is needed
• Positioning strategy, advertising, pricing, distribution, branding, packaging, budget levels are all
evaluated
• KFC 3 years on grilled chicken
 Commercialization

• Expensive decision to make

• McCafe $100million in first year on ads and promo
• When
• Where
• Few companies able to do immediate national launch
• Regional rollout
• To whom
• How
Product life cycle
• Can describe a
• product class (fast food
restaurants)
• product form (fast food
chicken)
• Brand (popeyes)
 Product Life Cycle
PLC
• Useful for describing how products and markets work but difficult to use for forecasting product performance or
developing marketing strategies
• Hard to know exactly when a product is in each stage
• Way to conceptualize the effect of the market, the environment, and competition and how product may react to
various stimuli
 introduction

• Few competitors, basic product versions

• Pioneers advantages and risk
 growth

• Sales grows beyond early adopters

• Competition grows
• Features develop and quality
• Prices remain about the same or drop a little, profit coming from volume
• Enter new segments
• Ads shift from awareness to conviction
maturity

• Typically longest stage

• Supply exceeds demand as sales slow
• Only way to increase sales is price wars and heavy ads
• Most marketing management decisions made in this stage
• Promotional creativity, reinvention, new items, new features
• Market Modification: try to increase consumption
• McD salads, breakfast
• Reposition to attract faster growing segment or larger one
• Product Modification: change product characteristics, quality, features, or style
• Marketing Mix Modification: cut price, creative promo
decline
• Maintain, harvest, or drop weak products
Product deletion
TUGAS
1. Definisikan produk hospitality pada salah bisnis yang ada di industry
hospitality !
2. Terangkan point 1 pada PLC !