Chapter 2 ELEMENTS OF SERVICE MARKETING - E ...

Chapter 2

ELEMENTS OF SERVICE MARKETING

Compiled by: Ms. Madhuri 1

Chapter 1

Hospitality Marketing

After completion of the chapter, the student shall be

able to understand:

To define service marketing.

To understand the elements of marketing from the

point of view of service industry.

To know the importance of 7 P’s.

To understand the terms related to service marketing.


2.1 Definition of Service Marketing

A product is tangible (i.e. material) since you can

touch it or own it. A service tends to be an experience

that is consumed at the point where it is purchased

and cannot be owned since it quickly perishes. A

person could go to a café one day and enjoy excellent

service, and then return the next day and have a poor

experience. Marketers talk about the nature of a

service as being inseparable, intangible, perishable,

homogenous and variable.


2.1.1 Inseparable

Inseparable - from the point where it is consumed,

and from the provider of the service. For example,

you cannot take a live theatre performance home to

consume it (a DVD of the same performance would

be a product, not a service). The consumer is actually

involved in the production process that they are

buying at the same time as it is being produced, for

example an eye test or a makeover.


2.1.1 Inseparable

One benefit would be that if you are unhappy with

your makeover you can tell the beautician and that

instant feedback means that the service quality is

improved. You can't do that with a product. Another

attribute is that services have to be close to the

person consuming them i.e. goods can be made in a

central factory location which has the benefits of

mass production. This localization means that

consumption is inseparable from production.


2.1.2 Intangible

Intangible - cannot have a real, physical presence as

does a product. For example, motor insurance may

have a certificate, but the financial service itself

cannot be touched i.e. it is intangible. This makes it

tricky to evaluate the quality of service prior to

consuming it since there are fewer attributes of

quality in comparison to a product. One way is to

consider quality in terms of search, experience and

credence.


2.1.3 Perishable

Perishable - in that once it has occurred it cannot be

repeated in exactly the same way.

E.g. Once a flight has taken off you cannot sell that

seat again, hence the airline makes no profit on that

seat. Therefore the airline has no choice but to price

at peak when it sells a seat at busy times in order to

make a profit. That's why restaurants offer vouchers

to compensate for quieter times, and it is the same for

railway tickets and matinees in Broadway during the

middle of the week.


2.1.4 Variable

Variability- since the human involvement in service

provision means that no two services will be

completely identical, they are variable.

E.g. With the greatly standardized McDonalds

experience, there are slight changes in service, often

through no fault of the business itself. Sometimes

Saturday lunchtime will be extremely busy, on other

days you may have to wait to go via the drive

through. So services tend to vary from one user

experience to another.


2.1.5 Homogenous

Homogeneity is where services are largely the same

(the opposite of variability explained above).

We considered McDonald's above which is a largely

homogeneous service, so now let's look at KFC and

Pizza Hut. Both of these businesses provide a

homogeneous service experience where ever you are,

Consumers expect the same level of service and

would not anticipate any huge deviation in their

experience.


2.1.5 Homogenous

Your regular hairdresser will deliver a style whereas

a hairdresser in the next town could potentially style

your hair differently. Therefore standardization is

largely embodied by the large global brands which

produce services.


2.2 Hospitality Products

The drinks that are sold in bars, mini-bars in rooms,

restaurants, soda fountains, etc.

The recreation facilities like tennis courts, water

sports, jogging tracks, television in rooms, etc.

The health and fitness facilities like gymnasiums,

massage parlors, yoga and aerobic rooms.



The beauty facilities like salons for men and women.

The shopping facilities like the shopping arcade,

malls and emporiums.

The entertainment facilities like water courses,

children’s parks, barbeque pits, banquet halls, night

clubs, supper theatre, etc.



Products in the hospitality are those physical tangible items which are offered for sale.

The products in the hospitality business under this definition are:

The hotel itself that is distinguished from others by size, price, location and appearance.



The guest rooms that are on offer such as single

rooms, double rooms and suites.

The restaurants such as coffee shops, specialty

restaurants, cafes, etc.

The food that is sold in restaurants, room service,

banquets, outdoor catering, delicatessens, bake shops

and patisseries.


Type of Hotels

We shall look at the hotel property as a product.

All hospitality marketers must be thoroughly familiar

with the types of hotel they promote and the clientele

they serve.

With the evolution of hotel and its proliferation

around the world it is impossible to categorize them

under one term.


Type of Hotels

Here is a list of hotels usually used in the tourism

circuit, each with a specific purpose and clientele:

Airport Hotel

Bed & Breakfast Hotel

Boutique Hotel

Budget Hotel

Business Hotel

Casino Hotel

Conference Hotel

Conventional Hotel


Type of Hotels

Destination Hotel

Deluxe Hotel

Downtown Hotel

Family Hotel

Group Hotel

Inns

Motel

Residential Hotel

Resort

Suburban Hotel

Suite HotelCompiled by: Ms. Madhuri 18

2.3 Range of Services provided by Hotels &

Restaurants

Services are provided by people who then assume an

importance in the service industry. It is often said that

the people make the difference between hotels and

restaurants. It is their quality and warmth of service

that makes the cutting edge.



Restaurants

Services are provided by people who then assume an

importance in the service industry. It is often said that

the people make the difference between hotels and

restaurants. It is their quality and warmth of service

that makes the cutting edge.



Restaurants

The Services provided in the hotel industry are:

Front Office Services:

a. The basic services provided by the front office are:

b. Selling rooms

c. Reserving rooms for guests before their arrival

d. Registering guests into the hotel

e. Assigning rooms



Restaurants

The Services provided in the hotel industry are:

Front Office Services:

f. Coordinating with other

services

g. Controlling guest room

keys

h. Providing in-house and external information to

guests

i. Maintaining accurate room status information

j. Maintain guest accounts and settle their bills



Restaurants

Uniformed Services:

a. The basic services provided by the front office are:

b. Selling rooms

c. Reserving rooms for guests before their arrival

d. Registering guests into the hotel

e. Assigning rooms



Restaurants

Uniformed Services

f. Coordinating with other services

g. Controlling guest room keys

h. Providing in-house and external information to

guests

i. Maintaining accurate room status information

j. Maintain guest accounts and settle their bills



Restaurants

Housekeeping Services:

This department is

responsible for the

cleanliness, maintenance

and the aesthetic standards

of the hotel. Housekeeping provides laundered staff

uniforms, room and restaurant linen and fresh and

dried flower arrangements. This service is

important to the guest because it keeps their rooms

clean to high standards of sanitation and hygiene.



Restaurants Food & Beverage Services:

Room Service

Room Service is a food

service operation. It provides

food and beverage to guest

rooms. The room service is located in the kitchen and

has order their food and beverage orders directly

from their rooms to the room service order-taker who

passes on the order to the service team. The service

team coordinates with the kitchen or the bar for the

preparation of the item.



Restaurants

Restaurant Service

Restaurant service is available through a choice of

dining opportunities explained earlier. The restaurant

provides meals and drinks by a waiting staff that is

qualified and artful in their profession.



Restaurants

Bar Service

Restaurant service is available through a choice of

dining opportunities explained earlier. The restaurant

provides meals and drinks by a waiting staff that is

qualified and artful in their profession.



Restaurants

Kitchen Service

Kitchens in large hotelshave independent sectionsto deal with various aspectsof food preparation due to the sheer volume of activity, smaller kitchens would club sections or have multi-skilled cooks to carry out several roles. Kitchen personnel coordinate with restaurants, room service and banquets for the supply of food orders.



RestaurantsLaundry Service

Event Service

These are provided by the banquet department to

conduct any kind of event within the Hotel Premises.

Health Club & Recreational Services

The health club is a specialist that has an

independent and qualified charge over gymnasium

for the guests. The recreation can be an independent

activity based on the no. of options available, like

Tennis Court, Squash court or outdoor sports

activities.



RestaurantsBeauty Service

The beauty salon provides hair dressing and beauty

care services.

Guest Relations

Guest relation executive ensures that all guests

especially the V.I.P.s are kept comfortable during

their stay.

Concierge Services

Concierge provides personalized services and

information to guests in large hotels during their stay

and offers messaging services.


2.4 Elements of Service Marketing

The elements of a services marketing mix are

sometimes called the seven Ps: the four Ps of the

marketing mix, plus three Ps of services:

people/participants, physical evidence, and process

(of service assembly).

The Marketing Mix is a good way to determine the

strategic position of a product or service in the

marketplace. This is not a new concept, according to

Wikipedia the origin of the Marketing Mix was in the

late 1940s and was presented to the AMA (American

Marketing Association) in the 1950s.



Product, Place, Promotion, & Price

Due to the nature of services, the implications of

product, place, promotion and price are different than

in the traditional marketing mix.



The Services Marketing Mix

Extending the 4Ps

The services marketing mix is an extension of the

4Ps framework. The essential elements of product,

promotion, price and place remain but three

additional elements - people, physical evidence and

process are included to the 7Ps mix.



The need for the extension is due to the high degree

of direct contact between service providers and its

customers, the highly visible nature of the service

process, and the simultaneity of the production and

consumption. Although it is possible to discuss

people, physical evidence and process within the 4P

framework (for example, people can be considered

part of the product offering), this extension allows

for a more thorough analysis of the marketing

elements necessary for successful services marketing


2.4.1 Product

In the case of services, the “Product" is intangible, heterogeneous and perishable. Moreover, its production and consumption are inseparable. Hence, there is scope for customizing the offering as per customer requirements, and the actual customer encounter therefore assumes particular significance. However, too much customization would compromise the standard delivery of the service and adversely affect its quality. Therefore, particular care has to be taken in designing the service offering.


2.4.2 Pricing

Pricing of services is tougher than pricing of goods. While the latter can be priced easily by taking into account the raw material costs, in the case of services there are attendant costs-such as labor and overhead costs-that also need to be factored in.

A restaurant not only has to charge for the cost of the food served but also has to calculate a price for the ambience provided.


2.4.3 Place

Since service delivery is concurrent with its

production and cannot be stored or transported, the

location of the service product assumes importance.

Service providers have to give special thought as to

where the service is provided.

A fine dining restaurant is better located in a busy,

upscale market as opposed to the outskirts of a city.

A holiday resort is better situated in the countryside

away from the rush and noise of a city.


2.4.4 Promotion

Since a service offering can be easily replicated,

promotion becomes crucial in differentiating a

service offering in the mind of the consumer. Service

providers offering identical services such as airlines

or banks and insurance companies invest heavily in

advertising their services. This is crucial in attracting

customers in a segment where the services providers

have nearly identical offerings.


2.4.4 Promotion

The additional Ps have been added because today

marketing is far more customer oriented than ever

before, and because the service sector of the

economy has come to dominate economic activity in

this country. These 3 extra Ps are particularly

relevant to this new extended service mix.


2.4.5 People

People are a defining factor in a service delivery

process, since a service is inseparable from the

person providing it. A restaurant is known as much

for its food as for the service provided by its staff.

The same is true of banks and department stores.

Consequently, customer service training for staff has

become a top priority for many organizations today.

Customer service lies at the heart of modern service

industries.


2.4.5 People

Customers are likely to be loyal to organizations that

serve them well - from the way in which a telephone

query is handled, to direct face-to-face interactions.

Although the 'have a nice day' approach is a bit

corny, it is certainly better than a couldn't care less

approach to customer relations. Call center staff and

customer interfacing personnel are the front line

troops of any organization and therefore need to be

thoroughly familiar with good customer relation's

practice.


2.4.6 Process

The process of service delivery is crucial since it ensures that the same standard of service is repeatedly delivered to the customers.

Most companies have a service blue print which provides the details of the service delivery process, often going down to even defining the service script and the greeting phrases to be used by the service staff. - associated with customer service are a number of processes involved in making marketing effective in an organization

e.g. processes for handling customer complaints, processes for identifying customer needs and requirements, processes for handling order etc.


2.4.7 Physical Evidence

Since services are intangible in nature, most service

providers strive to incorporate certain tangible

elements into their offering to enhance customer

experience.

Many hair salons have well designed waiting areas,

often with magazines and plush sofas for patrons to

read and relax while they await their turn.

Similarly, restaurants invest heavily in their interior

design and decorations to offer a tangible and unique

experience to their guests.


2.5 Elements of Hotel Marketing

In the highly specialized world of hotel marketing

there are certain points that must be taken into

account by any hotelier intending to check his

marketing efforts.


2.5.1 Popularity

The popularity of the hotel is how much search there

is for your hotel.

It’s a simple factor and can be measured through

basic tools like Google Analytics or other site

analytics tools.

The searches for your brand are the most qualified

leads you can get and the most important long term

strategy is to increase those searches.

Other tools are: Social media, advertising on search

engines and much more.


2.5.2 Rates & Availability

It goes without saying that your rates and availability

are the number one factor that will get you bookings.

Ensure you have named the correct competition to

compare to it’s not necessarily the hotel’s near you.

There are hotels we manage that only compare their

rates to hotels which are better located than them,

because their service, decor quality and reviews are

so much better than any hotel in their surroundings

they’re also much more expensive than those hotels.

By comparing to the right competition they’ve

increased their average price dramatically.


2.5.3 Brand Protection

No matter the popularity of your hotel you need to

protect your brand.

Remember these are your most valuable visitors.

Find out how many third parties are advertising on

your name and make sure you are always before

them.

Additionally, there are ways you can limit others to

advertise on your name and you should demand your

marketing department/agency to take action on these.


2.5.4 Design

There are two extremes in design and one middle ground.

The first extreme is going totally creative and making the most amazing website. While this is tempting and great for one’s ego, it isn’t necessarily the most efficient.

Then there’s the other extreme which is doing a site that’s only there to generate bookings and doesn’t help the hotel’s image.

The middle-ground is always the hardest it requires extremely good knowledge of the elements that make a website sell while having a keen eye for design.


2.6 Terms

Intangible: Incorporeal property that is saleable

though not material, such as bank deposits, stocks,

bonds, and promissory notes.

Heterogeneous: Diverse in kind or nature;

composed of diverse parts.

Noise: Data that is not being used to transmit a

signal, but is simply produced as an unwanted by-

product of other activities


2.6 Terms

Marketing Mix: A business tool used in marketing

products; often crucial when determining a product

or brand's unique selling point. Often synonymous

with the four Ps: price, product, promotion, and

place.

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.


2.6 Terms

Physical Evidence: Tangible clues such as

promotional material, employees of the firm and the

physical environment of the firm. It is used by a

service firm to make its product more tangible to

customers.


2.6 Terms

Revenue Management: A pricing method using

price as a means of matching demand with capacity.

Service Inseparability: A major characteristics 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 characteristics of

services; they cannot be seen, tasted, felt, heard or

smelled before they are bought.


2.6 Terms

Service Perishability: A major characteristics 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.


2.6 Terms

Service Variability: A major characteristics of

services; their quality may vary greatly depending on

who provides them and when, where and how they

are provided.

The service culture: The service culture focus on

serving and satisfying the customer. The service

culture has to start with top management and flow

down.


Compiled by: Ms. Madhuri

THANK YOU !!

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