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Service Characteristics of Travel and Tourism Marketing Objective: discussing four distinguishing characteristics of services and several things management.

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Presentation on theme: "Service Characteristics of Travel and Tourism Marketing Objective: discussing four distinguishing characteristics of services and several things management."— Presentation transcript:

1 Service Characteristics of Travel and Tourism Marketing Objective: discussing four distinguishing characteristics of services and several things management of service firms and in particular travel and tourism firms can do to increase the effectiveness of their business.

2 Services Marketing Service industries are quite varies: governmental services - courts, hospitals, police, fire departments, postal services, schools etc; private nonprofit organizations - museums, colleges, hospitals etc; business organizations - airlines, hotels, restaurants, advertising, real estate etc. Service industries are quite varies: governmental services - courts, hospitals, police, fire departments, postal services, schools etc; private nonprofit organizations - museums, colleges, hospitals etc; business organizations - airlines, hotels, restaurants, advertising, real estate etc.

3 Satisfying the Customers The aim of the service organizations is also serving and satisfying the customer. The aim of the service organizations is also serving and satisfying the customer. The belief that customer comes first is reinforced in Four Seasons Hotels where employees who go to extraordinary efforts to satisfy the customer are entitled to be the Employee of the Year, story of Ron Dyment, doorman in Toronto. The belief that customer comes first is reinforced in Four Seasons Hotels where employees who go to extraordinary efforts to satisfy the customer are entitled to be the Employee of the Year, story of Ron Dyment, doorman in Toronto.

4 Nature and Characteristics of Services There are four distinguishing characteristics of services. They are; Intangibility Intangibility Inseparability Inseparability Variability Variability Perishability Perishability

5 Service Intangibility means that unlike physical products, services cannot be seen, tasted, felt, heard or smelled before they are bought. means that unlike physical products, services cannot be seen, tasted, felt, heard or smelled before they are bought. Buyers look for signals or tangible evidences like the place, people, price, equipment and information about the service in order to reduce uncertainty caused by intangibility before they pay the price. E.g. the cleanliness of the restaurant, employee uniforms of the hotel, Heublein vs Smirnoff. Buyers look for signals or tangible evidences like the place, people, price, equipment and information about the service in order to reduce uncertainty caused by intangibility before they pay the price. E.g. the cleanliness of the restaurant, employee uniforms of the hotel, Heublein vs Smirnoff.

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7 Service Inseparability means that services cannot be separated from their both (1) providers and (2) other customers. means that services cannot be separated from their both (1) providers and (2) other customers. If a service employee provides the service, then the employee is part of the service. E.g. the food in the restaurant may be outstanding, but if the service person is rude, customers will downrate the overall service of the restaurant. If a service employee provides the service, then the employee is part of the service. E.g. the food in the restaurant may be outstanding, but if the service person is rude, customers will downrate the overall service of the restaurant. the other customers affect the service outcome as well. E.g. a couple may choose a restaurant but if a group of loud customers is seated next to them, the couple will be disappointed. the other customers affect the service outcome as well. E.g. a couple may choose a restaurant but if a group of loud customers is seated next to them, the couple will be disappointed.

8 Service Variability means that the quality of services depends on who provides them, plus, when, where, and how they are provided. E.g. within a given hotel chain, one reception desk agent may be cheerful and efficient one day but would be unpleasant and slow the other day. means that the quality of services depends on who provides them, plus, when, where, and how they are provided. E.g. within a given hotel chain, one reception desk agent may be cheerful and efficient one day but would be unpleasant and slow the other day. Service providers service quality depends on his energy and his frame of mind at the time of each customer encounter. Service providers service quality depends on his energy and his frame of mind at the time of each customer encounter. Fluctuating demand makes it difficult to deliver consistent services during periods of peak demand. Fluctuating demand makes it difficult to deliver consistent services during periods of peak demand. Variability or lack of consistency is the major cause of customer disappointment in the industry. Variability or lack of consistency is the major cause of customer disappointment in the industry.

9 Service Perishability means that services cannot be stored for later sale or use. E.g. if a 100 room hotel can sell only 40 rooms today, selling the remaining 60 is gone forever. means that services cannot be stored for later sale or use. E.g. if a 100 room hotel can sell only 40 rooms today, selling the remaining 60 is gone forever. If service providers are to maximize revenue, they must manage capacity and demand. E.g. hotels charge lower rates in the off-season to attract more guests; restaurants hire part-time employees to serve during peak periods; tour operators and airline companies have last-minute sales. If service providers are to maximize revenue, they must manage capacity and demand. E.g. hotels charge lower rates in the off-season to attract more guests; restaurants hire part-time employees to serve during peak periods; tour operators and airline companies have last-minute sales. Service perishability is a serious problem when demand fluctuates. Service perishability is a serious problem when demand fluctuates.

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11 Marketing Strategies for Service Firms Services are different form tangible products, that is why, additional marketing approaches are needed to market services. Services are different form tangible products, that is why, additional marketing approaches are needed to market services. In service businesses, the customer and front- line service employees interact. Service providers must interact effectively with customers to satisfy them. That is why, companies take care of their employees to make profit. Because they believe that only In service businesses, the customer and front- line service employees interact. Service providers must interact effectively with customers to satisfy them. That is why, companies take care of their employees to make profit. Because they believe that only

12 satisfied and productive service employees can create satisfied and loyal customers. Internal marketing; means that the service firm must effectively train and motivate its customer- contact employees to provide customer satisfaction. Internal marketing; means that the service firm must effectively train and motivate its customer- contact employees to provide customer satisfaction. Interactive marketing; means that service quality depends on the quality of the buyer-seller interaction during the service encounter. Interactive marketing; means that service quality depends on the quality of the buyer-seller interaction during the service encounter. In order to increase the profit margin, there are three major marketing tasks for service companies; In order to increase the profit margin, there are three major marketing tasks for service companies;

13 Managing Service Differentiation Differentiated offer, delivery and image are the keys for the solution to price competition. Differentiated offer, delivery and image are the keys for the solution to price competition. The offer can provide innovative features like e.g. in- flight movies, advance seating, frequent-flyer award programs in an airlines. British Airways offers a sleeping compartment and hot showers. The offer can provide innovative features like e.g. in- flight movies, advance seating, frequent-flyer award programs in an airlines. British Airways offers a sleeping compartment and hot showers.

14 The delivery can be differentiated by having better customer-contact people, developing a superior physical environment, or by designing a superior deliver process like e.g. home banking can be provided as a better way to deliver banking services. The delivery can be differentiated by having better customer-contact people, developing a superior physical environment, or by designing a superior deliver process like e.g. home banking can be provided as a better way to deliver banking services. The image can differentiate the service company through symbols and branding. The image can differentiate the service company through symbols and branding.

15 Managing Service Quality A service firm can also differentiate itself by delivering consistently higher quality than its competitors do. A service firm can also differentiate itself by delivering consistently higher quality than its competitors do. Service quality will always vary, depending on the interactions between employees and customers. A company cannot always prevent service problems but can recover them. A good service recovery can turn angry customers into loyal ones. Companies empower front-line Service quality will always vary, depending on the interactions between employees and customers. A company cannot always prevent service problems but can recover them. A good service recovery can turn angry customers into loyal ones. Companies empower front-line

16 service employees (giving authority to do whatever it takes to keep customers happy) to recover problems. Good service companies also communicate their qualities to employees and provide performance feedback. Good service companies also communicate their qualities to employees and provide performance feedback.

17 Managing Service Productivity Service productivity can be increased by; Service productivity can be increased by; training the employees better or hiring new and better employees training the employees better or hiring new and better employees industrializing the service with equipment and standardized production as in McDonalds industrializing the service with equipment and standardized production as in McDonalds using technology to save time and money using technology to save time and money Trying to increase the productivity would reduce quality and diminish customer service. That is why, some service providers accept to have lower productivity levels. Trying to increase the productivity would reduce quality and diminish customer service. That is why, some service providers accept to have lower productivity levels.

18 Particular Characteristics of Travel and Tourism Services In particular, travel and tourism products have the following special characteritics; Seasonality and demand fluctuations Seasonality and demand fluctuations High fixed costs of service operations High fixed costs of service operations Interdependence of tourism products Interdependence of tourism products

19 Seasonality and demand fluctuations As far as most leisure tourism markets are concerned, demand fluctuates greatly between seasons of the year. As a result, the occupancies in many tourism businesses increases to 90 to 100 per cent in the high season but drops to 30 per cent or less in the low season. In addition, seasonal closure of many leisure tourism businesses is common as well. These demand variations in tourism is more important because of perishability. That is why, generating demand when there is less demand, is always the major preoccupation for marketing managers. As far as most leisure tourism markets are concerned, demand fluctuates greatly between seasons of the year. As a result, the occupancies in many tourism businesses increases to 90 to 100 per cent in the high season but drops to 30 per cent or less in the low season. In addition, seasonal closure of many leisure tourism businesses is common as well. These demand variations in tourism is more important because of perishability. That is why, generating demand when there is less demand, is always the major preoccupation for marketing managers.

20 High fixed costs of service operations In the travel and tourism industry, it is generally the case that the operations have high fixed costs and relatively low variable costs. This fact focus all service operators attention on the need to generate extra demand. Since most large scale businesses are obliged to operate on a very narrow margin between total cost and total revenue because of intense competition, plus or minus one percentage point in average load factors makes the difference between profit or loss. In the travel and tourism industry, it is generally the case that the operations have high fixed costs and relatively low variable costs. This fact focus all service operators attention on the need to generate extra demand. Since most large scale businesses are obliged to operate on a very narrow margin between total cost and total revenue because of intense competition, plus or minus one percentage point in average load factors makes the difference between profit or loss.

21 Interdependence of tourism products The fortunes of all tourism organizations in a destination are linked. Since a vacationer chooses attractions at a destination together with the products of accommodation, transport, catering etc., all organizations should function in coordination. Partnership The fortunes of all tourism organizations in a destination are linked. Since a vacationer chooses attractions at a destination together with the products of accommodation, transport, catering etc., all organizations should function in coordination. Partnership

22 Marketing in tourism is shaped and determined by two important factors; Marketing in tourism is shaped and determined by two important factors; the operating characteristics of supplying industries the operating characteristics of supplying industries the nature of demand for tourism the nature of demand for tourism

23 Useful Links and Sources Kotler, P.; Bowen, J. and Makens, J. (1999). Marketing for Hospitality and Tourism (2nd ed.). Prentice Hall. NJ. Kotler, P.; Bowen, J. and Makens, J. (1999). Marketing for Hospitality and Tourism (2nd ed.). Prentice Hall. NJ. Kotler, P. and Armstrong, G. (2006) Principles of Marketing (11th ed.). Prentice Hall. NJ. Kotler, P. and Armstrong, G. (2006) Principles of Marketing (11th ed.). Prentice Hall. NJ. Middleton, V.T.C. (2004) Marketing in Travel and Tourism (3rd ed). Elsevier. Oxford. Middleton, V.T.C. (2004) Marketing in Travel and Tourism (3rd ed). Elsevier. Oxford.


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