Chapter 2 Service Characteristics of Hospitality and Tourism Marketing

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

Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens 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. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens 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. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens

Characteristics of Service Marketing

2006 Pearson Education, Inc. Upper Saddle River, NJ 07458

Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens 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. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens 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
Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens

2006 Pearson Education, Inc. Upper Saddle River, NJ 07458

Three Types of Marketing in Service Industries

2006 Pearson Education, Inc. Upper Saddle River, NJ 07458

Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens 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
Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens

2006 Pearson Education, Inc. Upper Saddle River, NJ 07458

Managing Differentiation
Solution to price competition

Differentiation through people, physical environment, and processes Differentiation through branding
2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens 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. Upper Saddle River, NJ 07458

Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens

Common Virtues Regarding Service Quality

1. Customer obsessed 2. History of top management commitment to quality 3. High service quality standards set 4. Monitor performance closely
2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens 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. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens

Managing the Physical Surroundings

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

Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens

Service Failure
Problems will inevitably occur

Keep the customer informed

Provide service recovery options

2006 Pearson Education, Inc. Upper Saddle River, NJ 07458

Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens

Overview of Service Characteristics: The Servuction Model

2006 Pearson Education, Inc. Upper Saddle River, NJ 07458

Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens 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. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens 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. Upper Saddle River, NJ 07458

Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens 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 guests vision

2006 Pearson Education, Inc. Upper Saddle River, NJ 07458

Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens 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 organizations culture, philosophy, vision, and mission
2006 Pearson Education, Inc. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens 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. Upper Saddle River, NJ 07458 Marketing for Marketing Hospitality forand Hospitality Tourism, and 4thTourism, edition 4th edition Kotler, Kotler,Bowen, Bowen,and andMakens Makens

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

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

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