© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Chapter Two Marketing Services and the Hospitality Experience

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Why Is the Marketing of Services Different?  Differences between goods and services –Intangibility –Heterogeneity –Simultaneous production and consumption –Perishability

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Perishability  Customers –Impacts quality due to fluctuations –Impacts availability as management creates demand –Price goes down when inventory gets high  Marketers –Must have ability to satisfy customers when demand dictates –Challenge to manage supply/demand –Cost control during low demand makes for difficult choices

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Heterogeneity  Customers –Needs are different –Have various amounts of knowledge, experience, and proficiency  Marketers –Concerned with employee/customer interactions –Use standardization and self-service technology

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Simultaneous Production and Consumption  Customers –Success of the sale lies in the service encounter –Each purchase comes with a new interaction and experience  Marketers –The customer can consume only what the seller can produce

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition The Four Components of a Service Physical Product  Whatever the organization transfers to the customer that can be touched  Must be customer oriented (create value)

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition The Four Components of a Service (cont.) Physical Product  Includes all interactions with the customer  Core performance purchased by the customer  “Plan Your Work” the promise Service Product

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition The Four Components of a Service (cont.)  Refers to what happens when your customer buys the service  “Work Your Plan” deliver on the promise  Example: The way the customer is greeted Physical Product Service Product Service Delivery

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition The Four Components of a Service (cont.) Source: Rust, Roland T. (1993). Service Quality, p. 31. Adapted from Sage Publications. Used by permission.  The physical backdrop that surrounds the service  “Servicescape”  3 Elements: ambient conditions; spatial layout; and signs, symbols, & artifacts Physical Product Service Product Service Delivery Service Environment

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Industry Physical Product Service Product Service Environment Service Delivery Full-service 5-star restaurant Food served Plan for how order is to be taken by wait- staff Use of pressed and starched table cloths and fine china and silverware How the waiter actually takes the order Casino Game of roulette Procedures for dealing the game Atmospherics of the casino Friendliness and competency of the dealer Hotel The firmness of the mattress Procedures for turndown service The colors and décor of the room Attitude of service personnel Interrelationships of Components

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Experience: The Result of Purchasing a Service  An experience is the result of the four components of a service  May not be management’s goal, but it is what the customer attains  Should be memorable, unfold over a period of time, and be inherently personal  …therefore create and command greater economic value

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Gap Model of Service Quality Premise:  The customer’s evaluation of a service purchase (e.g., their satisfaction) is determined by how well the purchase experience compares to their expectations of the purchase experience

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Gap Model of Service Quality (cont.) Evaluations of services are based on expectations because the characteristics of services:  intangibility,  heterogeneity, and  simultaneous production and consumption make it almost impossible for consumers to evaluate services in the same way they evaluate goods:  that is, before they buy the product

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Gap Model of Service Quality (cont.) Performance > Expectation Performance > Expectation Performance = Expectation Performance = Expectation Performance < Expectation 

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Reasons for Gap 1  Inadequate marketing research  Lack of upward communication  Insufficient relationship focus

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Ways to Close Gap 1 –Transactional surveys –Market-wide surveys –Mystery shopping –Service reviews –Customer advisory panels –Employee field reporting –Employee research –Focus groups

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Customer-driven service designs and standards Company perceptions of consumer expectations GAP 2 CUSTOMER COMPANY Gap 2

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Reasons for Gap 2  No customer-driven standards  Inadequate service leadership  Poor service design

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Ways to Close Gap 2  Service blueprinting  Visually displays the service by simultaneously showing the processes of: –Service delivery –Roles of customers and employees –Visible elements of the service

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Customer-driven service designs and standards Service Delivery GAP 3 CUSTOMER COMPANY Gap 3

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Reasons for Gap 3  Deficiencies in human resources  Failure to match supply and demand  Customers not fulfilling roles

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Ways to Close Gap 3  Treat employees as customers  Measure and reward strong service performers  Tell employees what is expected of them and how they will be rewarded for meeting those expectations  Let employees know the role they play in the company’s success and that what they are doing is important  Employees want management to stop saying what it is going to do and do it  Hire for service competencies and service inclination  Be the preferred employer  Train for technical and interactive skills  Empower employees  Promote teamwork  Provide supportive technology and equipment  Develop service-oriented processes  Include employees in the company’s vision  Employees want the opportunity to get ahead

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Service Delivery External Communications to customers CUSTOMER GAP 4 COMPANY Gap 4

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Reasons for Gap 4  Ineffective management of customer expectations expectations  Over-promising  Inadequate horizontal communications

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Expected Service Perceived Service CUSTOMER COMPANY GAP 5 Gap 5

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Reason for Gap 5  Service has not managed Gaps 1-4

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition Dimensions of Service Quality  Reliability  Assurance  Tangible  Empathy  Responsiveness

© 2007 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Shoemaker, Lewis, and Yesawich: Marketing Leadership in Hospitality and Tourism, 4 th edition