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Service Sector Management Notes

Service Sector Management Notes

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Published by Royal Projects

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Published by: Royal Projects on Sep 07, 2011
Copyright:Attribution Non-commercial


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There are four commonly cited characteristics of services that makethem different to market from goods: Intangibility, Inseparability, Variabilityand Perishability.
Intangible means that which cannot be seen or touched. Intangibleservices are difficult to sell because they cannot be produced and displayedahead of time. They are therefore harder to communicate to prospectivecustomers.Apart from food & beverages provided by the hotels, all otherofferings such as accommodation, catering etc are intangible & areexperience-oriented, thus its difficult to convince the customer about thequality of these offerings.Marketers of hotel services can overcome this characteristic bystressing tangible cues like brochures, photos etc., that will conveyreassurance and quality to the prospective customers. These tangible cuesrange from the firm's physical facilities to the appearance and demeanor of its staff to the letterhead on its stationery to its logo, recent facts & figuresetc.Ex: Centaur hotel overcomes this factor through its logo – The Centaur (amythical creature who is half man & half horse), with a bow & arrow,signifying speed & focus.McDonalds uses Ronald, the clown to attract children.
This characteristic is interpreted differently by different servicemarketing marketers, but all interpretations point out that special operationsproblems exist for the firm's managers. One interpretation of this term is theinseparability of customers from the service delivery process. In particular,many services require the participation of the customer in the productionprocess.In case of the hotel industry, customer has to be present forexperiencing the services being offered.This factor can be overcome by opening new branches/outlets,facilitating instant communication (through telecom), with the customers incase of any type of information/services needed during the stay in the hoteletc.Ex : Previously Domino’s mostly used to deliver its products to the homes of the customer; but there was no question of 
the customers. Thus,
Domino’s started opening more and more outlets so that it could provide thecustomers with more range of services.
The fact that service quality is difficult to control compounds themarketer's task. Intangibility alone would not be such a problem incustomers could be sure that the services they were to receive would be justlike the successful experiences their neighbors were so pleased with. But infact, customers know that services can vary greatly. Even the same serviceprovider has good days and bad days or may be less focused at differenttimes of day. Services are performances, often involving the cooperation andskill of several individuals, and are therefore unlikely to be same every time.This potential variability of service quality raises the risk faced by theconsumer.In the hotel industry,
fferent front-line personnel have differentabilities. The variability of hotel and catering services would differ because of the distinct skills and behavior of the various personnel serving thecustomers.The service provider must find ways to reduce the perceived risk dueto variability. One method is to design services to be as uniform as possible -by training personnel to follow closely defined procedures, or by automatingas many aspects of the services as possible. A second way to deal withperceived risk from variability is to provide satisfaction guarantees or otherassurances that the customer will not be stuck with a bad result.Ex : Coin operated soft drink machines which saves the time of theconsumer. There is no scope for variations in the service level.
The fourth characteristic distinguishing services from goods is theirtime dependence. Services cannot be inventoried, since they are performedin real time. And time periods during which service delivery capacity sits idlerepresent revenue-earning potential that is lost forever. Periods of peakdemand cannot be prepared for in advance by producing and storingservices, nor can they be made up for after the fact. A service opportunityoccurs at a point in time, and when it is gone, it is gone forever. This canpresent great difficulty in facilities planning.In the hotel industry, the accommodation provided can get perished if not booked or occupied on time.The service providers must developed alternative, counter seasonalservice products to use slack capacity, although that has long been acommon practice by goods marketers. Many service providers also controldemand by requiring appointments. Some service firms keep on call frontlinepersonnel who can arrive on short notice to meet the surges in demand, orcross train support personnel to assist with customer service during busyperiods. The service providers must overmarket their services to avoid theperishability factor.Ex : Hotels in Goa have less occupancy during monsoon.
The term marketing mix is the combination of what market offers andstudies which help in identifying the actual point where marketing action canbe taken to improve the acceptability of hotel product and stimulate demand.A modern hotel is a major establishment, a sophisticated job manned bytrained personnel from hotel schools, an institution of commercial hospitalityand a building or an institution where guests expect refined behaviour,excellent services and personal attention. This draws our attention on thecombination of sub-mixes in the hotel industry. With the viewpoint of marketing a hotel product, the combination of different sub-mixes is foundsignificant. The combination of core and peripheral services, the creativepromotional decisions, the pricing strategies helping hotels in maintaining thecommercial viability, the efficient hotel personnel instrumental in minimisingthe gap between the services-promised and services-offered, the educationand training programme for the development of hotel personnel efficacious inenriching their excellence as high performers are important decision makingareas which gravitate our attention on the formulation of a sound mix for thehotel industry. It is against this background that we go through the differentsub-mixes of the marketing mix;
In any organisation, we find product the focal point. The hotel servicesalso require a fair combination of core and peripheral services. It is right tomention that in almost all the hotels of same category by and large the coreservices are found identical and therefore the peripheral services divert aclose attention where the hotel personnel need professional excellence. Moreinnovative the peripheral services, more attractions we add to our productmix. This makes it essential that hotels and hotel companies assign dueweightage to the formulation of an optimal product mix in which peripheralservices prove to be a point of attraction.The emerging trends in the socio-economic parlance necessitate ananalogous change in the product mix. With the passage of time, it is quitenatural that some of the services becomes outdated and therefore, we needto eliminate them. At the same time, it is essential that we keep our mindsopen and come to know the latest developments in the likes and dislikes of the customers, and while including new services in the product mix, assigndue weightage to their preferences, While formulating the product mix it ispertinent that we make the ways for frequent innovation. It is also right tomention that frequency in innovation is found essential and at the same timeeasier in the context of peripheral services. The hotel professionals are

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