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. Service marketers must understand the four characteristics of services: intangibility, inseparability, variability, and perishability.
1- 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
2- 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

5. 3- 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
4- 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

6. Characteristics of Service Marketing
Service marketers must be concerned with four characteristics of services:
intangibility, inseparability, variability, and perishability
Four service characteristics.

7. 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

8. 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

9. 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.

10. Internal service quality
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.

11. Management Strategies for Service Businesses
Service Marketing
Service marketing requires more than just traditional external marketing using the four Ps.
service marketing also requires both internal marketing and interactive marketing.

12. 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

13. 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

14. 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

15. Management Strategies for Service Businesses
Managing Differentiation
Service companies can differentiate their service delivery in three ways:
through people
physical environment
process
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16. Management Strategies for Service Businesses
Managing Service Quality
A service firm can differentiate itself by delivering consistently higher quality than competitors.
with hospitality products, quality is measured by how well customer expectations are met
Expectations are based on past experiences, word- of-mouth, and service firm advertising.
A service firm’s ability to retain customers depends on how consistently it delivers value to them.

17. See this feature on page 43 of your textbook.

18. Management Strategies for Service Businesses
Managing Service Quality
Studies of well-managed service companies show they share common virtues regarding service quality.
top service companies are “customer obsessed”
well-managed service companies have a history of top management commitment to quality
the best service providers set high service- quality standards
the top service firms watch service performance closely, both their own and that of competitors
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19. Management Strategies for Service Businesses
Resolving Customer Complaints
Problems inevitably occur.
a company cannot always prevent service problems, but it can learn from them
Good service recovery can turn angry customers into loyal ones, and can win more customer purchasing & loyalty than if things had gone well in the first place.
Companies should take steps not only to provide good service every time but also to recover from service mistakes.

20. Management Strategies for Service Businesses
Resolving Customer Complaints: tips
To have effective complaint resolution, managers must empower frontline service employees.
Resolving complaints is a critical component of customer retention.
If you resolve a complaint, do it quickly—the longer it takes to resolve, the higher the defection rate
Seek out customer complaints as most customers do not complain. They just leave and never come back
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21. Management Strategies for Service Businesses
Methods to encourage Customer Complaints:
Customer hotlines
Comment cards
Training
a service guarantee is a way to get customers to complain. It may encourage customers to check and complain if not happy
Note: Customer complaints are one of the most available yet underutilized sources of customer and market information.
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22. Management Strategies for Service Businesses
Tangibilizing the Product
Promotional material, employees’ appearance, and the service firm’s physical environment all help tangibilize a service.
Everything about a hospitality company communicates something.
Physical surroundings should be designed to reinforce product position in the customer’s mind.
A service organization should review all tangible evidence to ensure it delivers the desired image.

23. Management Strategies for Service Businesses
Managing Employees as Part of the Product
In the hospitality industry, employees are a critical part of the service product and marketing mix.
This means the human resources and marketing departments must work closely together
The manager must hire friendly, capable employees and formulate policies that support positive relations between employees and guests.
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24. Management Strategies for Service Businesses
Managing Perceived Risk
Customers of hospitality products experience anxiety because they cannot experience the product first.
Warranty, assurance of satisfaction, physical evidences, accurate information, credibility… etc. may help reduce such risk
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25. Management Strategies for Service Businesses
Managing Capacity and Demand
Corporate management is responsible for matching capacity with demand on a long-term basis.
Managers have two major options for matching capacity with demand: change capacity or change demand.
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26. Capacity Management
Involving the Customer in the Service Delivery
Getting the customer involved in service operations expands productive capacity of the operation (i.e Self-service technologies (SSTs) allow the customer to serve as the company’s employee)
Cross-Training Employees can also increase productive capacity
Part-Time Employees
Renting or Sharing Extra Facilities
Schedule Downtime During Periods of Low Demand (to match lower demand or during the low season)
Change the Service Delivery System (i.e extend or reduce hours of operations)

27. Demand Management Using Price to Create or Reduce Demand
Using Reservations
Deposits (In cases where demand is greater than capacity, guests can be asked to prepay or make a deposit)
Overbooking (managers who limit reservations to the number of available rooms are often left with empty rooms. In fact,
not everyone who reserves a table or a room shows up
plans change & people with reservations become no-shows
overbooking is a method use to match demand with capacity, and it must be managed carefully
Revenue management (handling demand fluctuations through price modification)
Use Queuing (When capacity exceeds demand and guests are willing to wait, queues are used to manage demand)
Shifting Demand (i.e. peak pricing or off-peak pricing)
Create Promotional Events (i.e. special rates during slow periods)

28. 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

29. 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.

30. 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.