1. Service Characteristics of Hospitality and Tourism Marketing
Marketing for Hospitality and Tourism
Kotler, Bowen and Makens
Service Characteristics of Hospitality and Tourism Marketing
Chapter 2

2. Learning Objectives Describe a service culture.
Identify four service characteristics that affect the marketing of a hospitality or travel product.
Explain seven marketing strategies for service businesses

3. Characteristics of Service Marketing
Intangibility
Inseparability
Variability
Perishability
Characteristics
of Services
Service marketers must understand the four characteristics of services: intangibility, inseparability, variability, and perishability.
Intangibility
Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are purchased
One implication of experiential products is that we take away only the memories of our experiences
Service marketers should provide tangible evidence or takeaways
However, physical evidence that is not managed properly can hurt a business
Inseparability
Hospitality products are first sold and then produced and consumed at the same time
Customers and employees must understand the service delivery system because they are coproducing the service
Variability
Services are highly variable. Their quality depends on who provides them and when and where they are provided
Variability or lack of consistency in the product is a major cause of customer disappointment in the hospitality industry
Perishability
Services cannot be stored
Example:
A 100-room hotel that sells only 60 rooms on a particular night cannot inventory the 40 unused rooms and then sell 140 rooms the next night
Revenue lost from not selling those 40 rooms is gone forever

4. Steps to Reduce Variability
Invest in good hiring
& training
procedures
Standardize
The service-
performance
process
Monitor
Customer
Satisfaction
Invest in good hiring and training procedures
Better trained personnel exhibit six characteristics:
Competence
Courtesy
Credibility
Reliability
Responsiveness
Communication
Standardize the service-performance process throughout the organization
Diagramming the service delivery system in a service blueprint can simultaneously map out:
The service process
The points of customer contact
The evidence of service from the customer’s point of view
Monitor customer satisfaction
Use suggestion and complaint systems, customer surveys, and comparison shopping

5. The Service Profit Chain
Internal service quality
Satisfied and productive service employees
Greater service value
Satisfied and loyal customers
Healthy service profits and growth
The service profit chain links service firm profits with employee and customer satisfaction
Internal service quality
Superior employee selection and training, a quality work environment, and strong support for those dealing with customers, which results in…
Satisfied and productive service employees
More satisfied, loyal, and hardworking employees, which results in…
Greater service value
More effective and efficient customer value creation and service delivery, which results in…
Satisfied and loyal customers
Satisfied customers who remain loyal, repeat purchase, and refer other customers, which results in…
Healthy service profits and growth: superior service firm performance.

6. Types of Marketing Service Marketing Interactive Internal Marketing
Service marketing requires more than just traditional external marketing using the four Ps
Internal marketing means that the service firm must effectively train and motivate its customer-contact employees and all the supporting service people to work as a team to provide customer satisfaction
Interactive marketing means that perceived service quality depends heavily on the quality of the buyer–seller interaction during the service encounter

7. Marketing Strategies Service Differentiation Service Quality Service
Productivity
Customer
Complaints
Employees
As Part Of
The Product
Perceived
Risk
Capacity
and
Demand
Today as competition and costs increase and as productivity and quality decrease, more marketing sophistication is needed
Managing Service Differentiation
Service companies can differentiate their service delivery in three ways:
People
Physical environment
Process
Managing Service Quality
Once customer expectations are determined, managers need to develop a service delivery system that will deliver a service that meets the guest’s expectations
Well-managed service companies:
Are “customer obsessed”
Have top management committed to quality
Set high service-quality standards
Watch service performance closely, both their own and that of competitors
Managing Service Productivity
In attempting to improve service productivity, companies must be mindful of how they create and deliver customer value
Resolving Customer Complaints
A company cannot always prevent service problems, but it can learn from them
Good service recovery can turn angry customers into loyal ones
To have effective complaint resolution, managers must empower frontline service employees
When a customer does complain, management should be grateful because it gives them a chance to resolve the complaint and gain the customer’s repeat business
Managing Employees As Part Of The Product
The manager must hire friendly and capable employees and formulate policies that support positive relations between employees and guests
The job of the marketing department includes encouraging everyone in the organization to practice customer-oriented thinking
Managing Perceived Risk
Customers who buy hospitality products experience some anxiety because they cannot experience the product beforehand
Managing Capacity and Demand
See Slides 9-10

8. Recommendations for Improving Service Quality
Listening
Reliability
Basic service
Service design
Recovery
Surprising customers
Fair play
Teamwork
Employee research
Servant leadership
Listening
Understand what customers really want through continuous learning about the expectations and perceptions of customers and noncustomers (for instance, by means of a service-quality information system).
Reliability
The single most important dimension of service quality, reliability must be a service priority.
Basic service
Service companies must deliver the basics and do what they are supposed to do: keep promises, use common sense, listen to customers, keep customers informed, and be determined to deliver value to customers.
Service design
Develop a holistic view of the service while managing its many details.
Recovery
To satisfy customers who encounter a service problem, service companies should encourage customers to complain (and make it easy for them to do so), respond quickly and personally, and develop a problem-resolution system.
Surprising customers
Although reliability is the most important dimension in meeting customers’ service expectations, process dimensions such as assurance, responsiveness, and empathy are most important in exceeding customer expectations (e.g., by surprising them with uncommon swiftness, grace, courtesy, competence, commitment, and understanding).
Fair play
Service companies must make special efforts to be fair, and to demonstrate fairness, to customers and employees.
Teamwork
Teamwork is what enables large organizations to deliver service with care and attentiveness by improving employee motivation and capabilities.
Employee research
Marketers should conduct research with employees to reveal why ser-vice problems occur and what companies must do to solve problems.
Servant leadership
Quality service comes from inspired leadership throughout the organization; from excellent service-system design; from the effective use of information and technology; and from a slow-to-change, invisible, all-powerful, internal force called corporate culture.

9. Capacity Management
Involve the Customer in the Service Delivery System
Cross-Train Employees
Use Part-Time Employees
Rent or Share Extra Facilities and Equipment
Corporate management is responsible for matching capacity with demand on a long-term basis; unit managers are responsible for matching capacity with fluctuations in short-term demand
Involve the Customer in the Service Delivery System
Getting the customer involved in service operations expands the number of people that one employee can serve, thus increasing the capacity of the operation
Cross-Train Employees
When managers cross-train their employees, they can shift employees to increase the capacity
Use Part-Time Employees
Managers can use part-time employees to expand capacity during an unusually busy day or meal period or during the busy months of the year for seasonal businesses
Rent or Share Extra Facilities and Equipment
Businesses do not have to be constrained by space limitations or equipment limitations
Schedule Downtime During Periods of Low Demand
One way to decrease capacity to match the lower demand is to schedule repairs and maintenance during the low season
Change the Service Delivery System
Adjust operating systems to enable the business to operate at maximum capacity
However, remember that your goal is to create satisfied customers!
Schedule Downtime During Periods of Low Demand
Change the Service Delivery System

10. Use Price to Create or Reduce Demand Create Promotional Events
Demand Management
Use Price to Create or Reduce Demand
Use Reservations
Overbook
Revenue Management
Use Queuing
The following are some ways to manage demand:
Use Price to Create or Reduce Demand
Pricing is one method used to manage demand
When demand exceeds capacity, managers raise prices to lower demand
Use Reservations
Hotels and restaurants often use reservations to monitor demand
When it appears they will have more demand than capacity, managers can save capacity for the more profitable segments. Reservations can also limit demand by allowing managers to refuse any further reservations when capacity meets demand
Overbook
Not everyone who reserves a table or books a room shows up
Overbooking is another method that hotels, restaurants, trains, and airlines use to match demand with capacity
Revenue Management
Managers can create more demand for a product by lowering its price and lower demand by raising its price
Use Queuing
Voluntary queues, such as waits at restaurants, are a common and effective way of managing demand
Shift Demand
If the date is flexible, the manager shifts the date to a period when the hotel is not projected to sell out and needs the business
Create Promotional Events
An object of promotion is to increase demand or, as we will learn later, to shift the demand curve to the left
Shift Demand
Create Promotional Events

11. Tips for Managing Waiting Lines
Unoccupied time feels longer than occupied time
Unfair waits are longer than equitable waits
Uncertain Waits Are Longer than Known, Finite Waits
Examples:
Entertainment parks have characters who talk to kids in waiting lines, occupying time and making the wait pass faster
Rather than put a party of four at a table for six, the restaurant seats a party of six at the table, even if there are several parties of four in front of them. This sometimes leads to anger on the part of the guests in the passed-over party of four
When possible we should tell guests the reason for the delay and the expected amount of time of the delay to prevent customer anxiety caused by uncertainty

12. Key Terms
Interactive marketing Marketing by a service firm that recognizes perceived service quality depends heavily on the quality of the buyer– seller interaction.
Internal marketing Marketing by a service firm to train effectively and motivate its customer-contact employees and all the supporting service people to work as a team to provide customer satisfaction.
Organization image The way a person or group views an organization.
Physical evidence Tangible clues such as promotional material, employees of the firm, and the physical environment of the firm. Physical evidence is used by a service firm to make its product more tangible to customers.
Revenue management A pricing method using price as a means of matching demand with capacity.
Service culture definition to look like this. Definition to look like this.

13. Key Terms (cont.)
Service inseparability A major characteristic of services; they are produced and consumed at the same time and cannot be separated from their providers, whether the providers are people or machines.
Service intangibility A major characteristic of services; they cannot be seen, tasted, felt, heard, or smelled before they are bought.
Service perishability A major characteristic of services; they cannot be stored for later use.
Service-profit chain A model that shows the relationships between employee satisfaction, customer satisfaction, customer retention, value creation, and profitability.
Service variability A major characteristic of services; their quality may vary greatly, depending on who provides them and when, where, and how they are provided.