Chapter 2 Service Characteristics of Hospitality and Tourism Marketing

“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

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

The Service Culture The service culture focuses on serving and satisfying the customer Empowers employees to solve customer problems Majority of many countries’ GDP is service based ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Characteristics of Service Marketing ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Management Strategies for Service Businesses Service companies must increase their competitive differentiation, service quality, and productivity Increase in competition and costs Decrease in productivity and quality ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Service-Profit Chain Five Links: Healthy service profits and growth Satisfied and loyal customers Greater service values Satisfied and productive service employees Internal service quality ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Three Types of Marketing in Service Industries ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Internal and Interactive Marketing Internal marketing means the service firm must effectively train and motivate customer contact employees Interactive marketing means the perceived service quality depends heavily upon the buyer-seller interaction during the service encounter ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Managing Differentiation Solution to price competition Differentiation through people, physical environment, and processes Differentiation through branding ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Managing Service Quality Exceed customers’ service-quality expectations Expectations based on past experiences, word-of-mouth, and service firm advertising ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Common Virtues Regarding Service Quality “Customer obsessed” History of top management commitment to quality High service quality standards set Monitor performance closely ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Tangibilizing the Product Providing “evidence” of the service Promotional Material Physical Environment Employee appearance Why is Trade Dress Protection important? ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Managing the Physical Surroundings Improperly managed physical evidence can hurt a business Surroundings should reinforce company positioning in customer’s mind Organizational Image is how customers perceive your organization ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Stress Advantages of Nonownership The customer does not have ownership of service product Stress as a benefit Rather than own and staff corporate lodging, negotiate a rate with a hotel and pay for only what you use ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Managing Employees as Part of the Product Employees are critical Training and motivating employees to provide good customer service is internal marketing A point-of-encounter is any point at which the employee encounters the customer ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Managing Perceived Risk Alleviate customer anxiety due to inability to experience the product beforehand Familiarization trips encourage clients to experience the enterprise in a low-risk situation ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Managing Capacity and Demand Due to perishability, managers must maximize service capacity and quality during times of high and low demand Customer complaints increase when service firms operate above 80% capacity ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Managing Consistency No surprises! Not only should services be provided correctly, but they should be done the same way every time Beware fluctuating demand and unintentional company policies that may affect consistency ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Managing the Customer Relationship – CRM Combines marketing, business strategy and information technology to better understand the customers Develop unique, lasting relationships with customers ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Service Failure Problems will inevitably occur Keep the customer informed Provide service recovery options ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Overview of Service Characteristics: The Servuction Model ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Interaction Between Customer A and Customer B Contact between customers can be positive or negative In some cases interaction between customers can be managed Customers can significantly impact all around them ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Contact Personnel Contact personnel have a direct impact on the satisfaction of customers Characteristic of inseparability of customer and employee during service delivery system ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

The Invisible Organization and System A service organization management must decide what they want the guest to see and what they want to keep out of the guest’s vision ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Best Practices Ritz-Carlton Leadership Center offers innovative ways to: Increase employee retention and loyalty Increase customer retention and loyalty Achieve service excellence in your industry Effectively drive your organization’s culture, philosophy, vision, and mission ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Best Practices Why are these hospitality and tourism organizations service leaders? Chipotle Restaurants Marriott Hotel and Vacation Club Ting Tai Fung Club Med Disney Aramark British Airways ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Key Terms Interactive marketing Internal marketing Organization image Physical evidence ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Key Terms Point-of-encounter Service culture Service intangibility Service inseparability ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Key Terms Service perishability Service-profit chain Service variability  Trade dress ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens