1. Service Characteristics of Hospitality and Tourism Marketing

2. Key Terms Interactive marketing Internal marketing Organization image
Physical evidence
Point-of-encounter
Service culture
Service intangibility 
Service inseparability
Service perishability 
Service-profit chain 
Service variability

3. “Managers do not control the quality of the product when the product is a service The quality of the service is in a precarious (risky) state – it is in the hands of the service workers who ‘produce’ and deliver it.” - Karl Albrecht

4. 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

5. 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

6. Characteristics of Service Marketing

7. Characteristics of Service Marketing
Intangibility
The attributes of services that cannot be grasped by any of the five senses
Aspects of a service that are difficult to grasp prior to purchase
Purchase is based on consumer expectations

8. 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 
Teaching
Consulting 

9. Services Versus Goods Perishability
If not sold by a particular time, the opportunity to sell it again is gone forever
Complicated by fixed capacity
Unique to the hospitality industry

10. Services Versus Goods Heterogeneity – no standardation
Delivery of services is inconsistent due to employee variance and varying needs of customers
“Moment of truth” when the service product meets service delivery and consistency is key
Customers are also varied and have different wants and needs
The use of self-service technologies in an attempt to standardize service

11. Services Versus Goods Simultaneous production and consumption
Services are consumed at the same time they are purchased
Thus management is marketing in the hospitality and tourism industry
Always the possibility of a new experience with each purchase

12. Services Versus Goods The Hospitality Product
The combination of goods, services, environment and experience that the consumer buys
Differences between services and manufactured goods
Defines how the service should theoretically work

13. The Hospitality Product model

14. 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

15. The Hospitality Product
Service Product
The core performance or service purchased by the patron
Service delivery
What happens when the customer actually consumes the service

16. The Hospitality Product4

17. 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

18. 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

19. Three Types of Marketing in Service Industries

20. 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

21. Managing Differentiation
Solution to price competition
Differentiation through people, physical environment, and processes
Differentiation through branding

22. Managing Service Quality
Exceed customers’ service - quality expectations
Expectations based on past experiences, word-of-mouth, and service firm advertising

23. Tangibilizing the Product
Providing “evidence” of the service
Promotional Material
Physical Environment
Employee appearance
Why is Trade Dress Protection important?

24. 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

25. Stress Advantages of Non-ownership
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

26. 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

27. Managing Perceived Risk
Alleviate(reduce) customer anxiety due to inability to experience the product beforehand
Familiarization trips encourage clients to experience the enterprise in a low-risk situation

28. 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

29. Managing Consistency No surprises!
Not only should services be provided correctly, but they should also be done the same way every time
Beware of fluctuating demand and unintentional company policies that may affect consistency

30. Managing the Customer Relationship – CRM
Combines marketing, business strategy and information technology to better understand the customers
Develop unique, lasting relationships with customers

31. Service Quality and Service Gaps
Premise:
The customer’s evaluation of a service purchase (e.g., their satisfaction) is determined by how well the purchase experience compares to their expectations of the purchase experience
Zone of tolerance is the range where customers are still satisfied
Can use the SERVQUAL model

32. Gap Model of Service Quality
Performance > Expectation 
Performance = Expectation 
Performance < Expectation 

33. Possible Levels of Customer Expectations

34. Service Quality and Service Gaps
Gap between services expected by the customer and management’s perceptions of customers’ expectations
Gap 2
Gap between management’s perceptions of customer expectations and service quality specifications
Gap 3
Gap between service quality specifications and service delivery
Gap 4
Gap between the service delivered and the service promised
Gap 5
Gap between the perceived service and the actual service

35. Service Failure Problems will inevitably occur
Keep the customer informed
Provide service recovery options

36. Overview of Service Characteristics: The Servuction Model

37. 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

38. Contact Personnel
Contact personnel have a direct impact on the satisfaction of customers
Characteristic of inseparability of customer and employee during service delivery system

39. 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

40. Discussion Questions
Visit the web site of a hotel chain. What does the web site do to make the product tangible for the customer? Is there anything in the site that deals with the characteristic of perishables.
Visit the web site of a tourism destination; it can be either a city or a country. Explain how the site provides tangible evidence relating to the experiences a visitor to the destination can expert.
Who are the basic contacs persons at the three different tourism operations; hotel, restaurant and airline company. What are their roles as contact person

41. End of Chapter Slides