Chapter 2

Service
Characteristics
of Hospitality
and Tourism
Marketing

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
“Managers do not control the quality of the product
when the product is a service . . . .
The quality of the service is in a precarious state –
it is in the hands of the service workers who
‘produce’ and deliver it.”

-Karl Albrecht

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Chapter Objectives
• Describe a service culture

• Identify four service characteristics that affect

the marketing of a hospitality or travel
product.

• Explain marketing strategies that are useful in

the hospitality and travel industries

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 The Service Culture
• The service culture focuses on serving
and satisfying the customer

• Empowers employees to solve

customer problems

• Majority of many countries’ GDP is

service based
©2006 Pearson Education, Inc. Marketing for
Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Characteristics of Service
Marketing

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Management Strategies for
Service Businesses
• Service companies must increase their
competitive differentiation, service
quality, and productivity

– Increase in competition and costs

– Decrease in productivity and quality

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Service-Profit Chain
Five Links:
• Healthy service profits and growth

• Satisfied and loyal customers

• Greater service values

• Satisfied and productive service employees

• Internal service quality

©2006 Pearson Education, Inc. Marketing for
Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Three Types of Marketing in
Service Industries

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Internal and Interactive
Marketing
• Internal marketing means the service
firm must effectively train and motivate
customer contact employees

• Interactive marketing means the

perceived service quality depends
heavily upon the buyer-seller
interaction during the service
encounter
©2006 Pearson Education, Inc. Marketing for
Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Managing Differentiation

• Solution to price competition

• Differentiation through people, physical

environment, and processes

• Differentiation through branding

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Managing Service Quality

• Exceed customers’ service-quality

expectations

• Expectations based on past

experiences, word-of-mouth, and
service firm advertising

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Common Virtues Regarding
Service Quality
1. “Customer obsessed”

2. History of top management commitment to

quality

3. High service quality standards set

4. Monitor performance closely

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Tangibilizing the Product
• Providing “evidence” of the service

– Promotional Material

– Physical Environment

– Employee appearance

– Why is Trade Dress Protection important?

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
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4thTourism,
edition 4th edition
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Kotler,Bowen,
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andMakens
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 Managing the Physical
Surroundings
• Improperly managed physical evidence
can hurt a business

• Surroundings should reinforce company

positioning in customer’s mind

• Organizational Image is how customers

perceive your organization
©2006 Pearson Education, Inc. Marketing for
Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Stress Advantages of
Nonownership
• The customer does not have ownership
of service product

• Stress as a benefit
– Rather than own and staff corporate
lodging, negotiate a rate with a hotel and
pay for only what you use

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Managing Employees as
Part of the Product
• Employees are critical

• Training and motivating employees to provide

good customer service is internal marketing

• A point-of-encounter is any point at which

the employee encounters the customer

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Managing Perceived Risk
• Alleviate customer anxiety due to
inability to experience the product
beforehand

• Familiarization trips encourage clients to

experience the enterprise in a low-risk
situation

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
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 Managing Capacity and
Demand
• Due to perishability, managers must
maximize service capacity and quality
during times of high and low demand

• Customer complaints increase when

service firms operate above 80%
capacity
©2006 Pearson Education, Inc. Marketing for
Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
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 Managing Consistency
• No surprises!
• Not only should services be provided
correctly, but they should be done the
same way every time
• Beware fluctuating demand and
unintentional company policies that
may affect consistency

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Managing the Customer
Relationship – CRM
• Combines marketing, business strategy and
information technology to better understand
the customers

• Develop unique, lasting relationships with

customers

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Service Failure

• Problems will inevitably occur

• Keep the customer informed

• Provide service recovery options

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Overview of Service Characteristics:
The Servuction Model

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Interaction Between
Customer A and Customer B
• Contact between customers can be
positive or negative

• In some cases interaction between

customers can be managed

• Customers can significantly impact all

around them
©2006 Pearson Education, Inc. Marketing for
Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Contact Personnel
• Contact personnel have a direct impact
on the satisfaction of customers

• Characteristic of inseparability of
customer and employee during service
delivery system

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 The Invisible Organization
and System
A service organization management must
decide what they want the guest to see
and what they want to keep out of the
guest’s vision

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Best Practices
• Ritz-Carlton Leadership Center offers
innovative ways to:
– Increase employee retention and loyalty
– Increase customer retention and loyalty
– Achieve service excellence in your
industry
– Effectively drive your organization’s
culture, philosophy, vision, and mission

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Best Practices
• Why are these hospitality and tourism
organizations service leaders?
– Chipotle Restaurants
– Marriott Hotel and Vacation Club
– Ting Tai Fung
– Club Med
– Disney
– Aramark
– British Airways
©2006 Pearson Education, Inc. Marketing for
Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Key Terms

• Interactive marketing

• Internal marketing

• Organization image

• Physical evidence
©2006 Pearson Education, Inc. Marketing for
Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Key Terms
• Point-of-encounter

• Service culture

• Service intangibility 

• Service inseparability
©2006 Pearson Education, Inc. Marketing for
Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens
 Key Terms
• Service perishability 

• Service-profit chain 

• Service variability 

• Trade dress

©2006 Pearson Education, Inc. Marketing for

Marketing
Hospitality
forand
Hospitality
Tourism,and
4thTourism,
edition 4th edition
Upper Saddle River, NJ 07458 Kotler,
Kotler,Bowen,
Bowen,and
andMakens
Makens