Service Marketing Strategies for Hospitality Businesses

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

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

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

Characteristics of Service
Marketing

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

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

Three Types of Marketing in
Service Industries

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

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

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

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

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

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

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

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

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

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

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

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

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

Overview of Service Characteristics:
The Servuction Model

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

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

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

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

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

Key Terms
• Interactive marketing
• Internal marketing
• Organization image
• Physical evidence

Key Terms
• Point-of-encounter
• Service culture
• Service intangibility
• Service inseparability

Key Terms
• Service perishability
• Service-profit chain
• Service variability
• Trade dress

Service Marketing Strategies for Hospitality Businesses

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