Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Chapter 11: Building Customer Loyalty Through Quality

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Figure 11-1

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Traditional Marketing Orientation to single sales Discontinuous customer contact Focus on product features Short time scale Little emphasis on customer service Limited commitment to meeting customer expectations Quality is the concern of the production staff Relationship marketing Orientation to customer retention Continuous customer contact Focus on customer value Long time scale High customer service emphasis High commitment to meeting customer expectations Quality is concern of all staff Relationship Marketing Compared With Traditional Marketing

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Customer Delivered Value Equals Minus Total customer Value Total customer cost (Products, services, personnel, and image values) (Monetary, time, energy, and psychic costs) (“Profit” to the consumer)

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Customer Satisfaction Customer Satisfaction with a purchase depends on the product’s performance relative to a buyer’s expectations. If performance exceeds or meets expectations the customer is highly satisfied or delighted.

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Customer Satisfaction Versus Customer Loyalty Customer satisfaction – How well expectations are met Customer Loyalty –Behavior – Do customers come back or intend to come back –Emotional Attachment – Do customer spread positive word of mouth and perform other partnership activities

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Five Levels of Relationships Basic Reactive Accountable Proactive Partnership The company sells the product but does not follow-up The company sells the product and encourages the customer to call when the have problems or questions. The company’s representative checks on customer after the sales and the event to make sure things were satisfactory and to get feedback. The salesperson or others in the company phone customers from time to time to seek suggestions. The company works continuously with the customer to discover ways to develop better value.

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Three Customer Value- Binding Approaches Financial benefits Social benefits Social benefits Structural ties

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Establishing a Relationship Marketing Program Identify the key customers meriting relationship management Assign a skilled relationship manager to each customer Develop a clear job description for relationship managers

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Establishing a Relationship Marketing Program Have each relationship manager develop annual and long-range customer relationship plans Appoint an overall manager to supervise the relationship managers

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Internal Costs Rework (back of the house) Facility Downtime Loss of Morale High employee turnover Loss of employee marketing

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Complaint resolution Approximate percentages that will purchase again if they have a complaint –82% if resolved quickly –50% if resolved –15% if not resolved –9% if they don't communicate their complaint

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Managers and employees should treat complaining customers as the most important customer - and listen to their complaints Complaints and problems create opportunities to develop loyalty Knowing customer value gives us an idea of how far we want to got fix the problem

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Managing the Perceived Service Quality Source: Christian Gronroos

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Benefits of Service Quality Retaining customers Avoidance of price competition Retention of good employees Reduction of costs

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Developing a Service Quality Program 1.Supply strong leadership 2.Integrate marketing throughout the organization 3.Understand the customer 4.Understand the business 5.Apply operational fundamentals

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Developing a Service Quality Program 6.Leverage the freedom factor 7.Use appropriate technology 8.Practice good human resource management 9.Set standards, measure performance, and establish incentives 10.Feed back the results to the employees

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Managing Capacity Involve customers in the delivery system Cross-train employees Use part - time employees Rent or share facilities and equipment

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Managing Capacity Schedule downtime during periods of low demand Extend service hours Use technology Use price

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Customers as Employees Reservations Check - out Check-in Salad bar Honor bar - concierge floor Macaroni Grill - wine Fast food - beverages Cook Steak

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Managing Demand Use price to increase or reduce Use reservations Overbook Use queuing Shift demand Change salesperson’s assignment Create promotional events

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Waiting Time Unoccupied times feels longer than occupied time Unfair waits are longer than equitable waits

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Chapter 11: Figure 11-3: Conceptual model of service quality - the gap analysis model. Source: Leonard l. Berry, A. Parasuraman, and Valarie A. Zeithaml.

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Close Gap 1 by; 1. Talking to customers 2. Talking to customer contact employees 3. Marketing information systems-- customer surveys-- analysis by segment-- focus groups 4. Reducing levels of management

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Close Gap 2 1. Management Commitment-- resources, internal marketing, reward systems 2. Use of hard and soft technology 3. Shift demand 4. Is meeting customer expectations financially feasible?

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Close Gap 3 1. Training 2. Internal marketing, pride 3. Teamwork 4. Reward systems 5. Service quality audits

Marketing for Hospitality and Tourism, 3e©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James MakensUpper Saddle River, NJ Close Gap 4 1. Know the capabilities of the firm 2. Good communications within the firm 3. Internal marketing-- teamwork