Master of management

Gadjah Mada University

MARKETing management
Designing and managing services
Case Study : Ritz-Carlton Hotels

Lecture : Prof. Dr. Basu Swastha Dharmmesta,

M.B.A

Group 4
Anne Stam [Student Exchange]

Febrini Wulandari 08/277511/PEK/12841

Irwan Arfandi Bachtiar 08/277521/PEK/12851

 Case Summary

Ritz-Carlton Hotels, California, USA

Ritz-Carlton is a brand of luxury hotel and resort with 70 properties

that are located in major cities and exclusive resort destinations of 23
countries worldwide. The Ritz-Carlton brand is managed by the Ritz-
Carlton Hotel Company LLC, a subsidiary of Marriott International. The
Ritz-Carlton Hotel Company has currently 32,000 employees. The Ritz-
Carlton headquarters are found in Chevy Chase, Maryland, a community
along the border of Washington, D.C..
Ritz-Carlton redefining again 5 New Gold Standard, is primarily
intended to help managers, owners, and leaders understand the driving
principles, processes, and practices that have generated unusual staf
loyalty, world-class customer engagement, and significant brand equity
for Ritz-Carlton.
People are spending a lots of money now, they are
looking for luxury, finest, comfortable, warm,
relaxed and others great facilities from living for a
while in hotels, Ritz-Carlton have to provide it as
they services.
Simon F. Cooper, president and chief operating
officer, The Ritz-Carlton Hotel Company, L.L.C., said
Over the years we have been approached by many authors seeking to write
about our company and examine the methodology we have used to make The
Ritz-Carlton brand one of the most frequently recognized and critically acclaimed
luxury names in the world. Only when Dr. Michelli came to us with his vision for
telling the story did we agree to provide unprecedented levels of access to our
Ladies and Gentlemen and customers. We believe sharing what we have learned
will provide valuable lessons to any company seeking to improve its customer
1
service, whether they are a small day spa or a Fortune 500 company.

Main Issues
As the main idea of Ritz-Carlton business, services is being number one
performance to ofer to consumer. Ritz-Carlton leaders are responsible for
stewarding an icon in the luxury market, through a constant quest for
excellence, to continue its success in a changing global economy and with
changing customer needs. Even in areas of international growth,
succession planning, finding the best location for your business, or
determining meaningful quality enhancements, Ritz-Carlton ofers a rich
tapestry of leadership successes and breakdowns that can help you
shorten your path to greater success.
This topic is closely related to 5th point of their gold standard. Or
course they still doing exceptional services because, customer satisfaction
and loyalty are logical consequences for maintaining that high standard.
Ritz-Carlton also doing step they called three steps of service, that
intends to give more respect for the customer, but do not forget it can
brings more respect from the cstomer to the Ritz brand more.
The three steps of service are :
1. A warm and sincere greeting. Use the guest's name.
2. Anticipation and fulfillment of each guest's needs.
3. Fond farewell. Give a warm good-bye and use the guest's name.

1 Data accessed on
http://corporate.ritzcarlton.com/en/Press/Releases/The_New_Gold_Standard_Book
.htm, March 3, 2009.
The New Gold Standard is The Ritz-Carlton Hotel Company's legendary
service. The 5 principles that identified as elemental to creating Ritz-
Carlton's memorable customer experience:2
1. Define and Refine
2. Empower through Trust
3. It's not about You
4. Deliver WOW
5. Leave a Lasting Footprint

Problem Statement
What is at the essence of this iconic company? What is the Ritz-Carlton
experience? While the answer reflects some variability based on the
source, there is a striking consistency of opinion.
Ritz-Carlton 5 Golden Standard, that they called to serve customer all the
time, how its woks? What is customer deserve from Ritz-Carlton services?
How about human resources in Ritz-Carlton Companies?

Analysis of Solution Alternative

A service is any act or performance one party can ofer to another that is
essentially intangible and does not result in the ownership of anything. Its
production may or may not be tied to a physical product. Increasingly,
however manufacturing, distributors, and retailers are providing value-
added services, or simply excellent customer service, to diferentiate
themselves.

2 Data accessed on http://josephmichelli.com/newsletters/2008.05.html, March

4, 2009.
 Ritz-Carlton Chicagos services room.
In category index, Ritz-Carlton services is refers to Major Service
with Accompanying goods and service (others is Pure Tangible Good,
Tangible Good with Accompanying Services, Hybrid, Major Services with
Accompanying Minor Goods and Services, and Pure Service). Ritz-Carlton
also provide services with everything that near to that goods or services,
such as mini-bar to serve beverages, mini-bookstore, travel agency,
casino, laundry, and others. But in this case, focus is in the services, how
to serve the best for consumer as their expectations, Ritz-Carlton
assumed, survey and brand images is in deluxe classification near under
Four Season Hotel Brands.

The Ritz-Carlton is well-known for providing consistent service

throughout all of its properties. They also established its Gold Standards
for customer service leading the company to repeatedly outperform its
competition and increase customer loyalty.

At the Ritz-Carlton Leadership Center, the company's goal is to

emulate its winning service and become the preferred provider of training
and organizational change for all industries, not just hospitality.
 Ritz-Carlton division, part of HRM success, Malcolm Balridge Award winner
twice

Human Resources is another phase to getting work to makes

satisfying services. Employees are called passionate advocates at the Ritz;
they exhibit personality traits that hiring managers specifically seek out
when recruiting and interviewing candidates. To ensure that interviewees
are sincerely positive people, managers use two-part interview questions
that weed out those who are insincere.

Once through the interviewing and hiring processes, new employees

begin orientation, which lasts two days and covers topics ranging from the
importance of grooming to total quality management. This focus led to the
development of a Quality Selection Process (QSP) in partnership with
Talent Plus, an international psychological selection and human resource
consulting firm. Companies drop the ball with employee investment. They
have a commitment to the customer, but they have to find ways to have
the same level of commitment with Ritz-Carlton most valuable resource,
its their employees.

Recommendation
Ritz-Carlton is a huge business in hotel
services, but their services can be improved
more bigger, so there is some
recommendation to reach the goals or at
least to increasing their services, marketing
strategy, profit and brand images. Services is
the necessary things to be provided by Ritz-
Carlton.
Services have four distinctive characteristics
that greatly afect the design of marketing programs: intangibility,
inseparability, variability, and perishabilty. Ritz-Carlton is define in all in
the design of marketing programs. First, Intangibility for Ritz-Carlton is
consumer can not feels, give values and comment before they use and
purchase the hotels services. Inseparability for Ritz-Carlton? although they
are provide services for rest and holiday, but they are also buy and
manufactured their goods such as shampoo, soap, tooth paste, sheet,
parfumes, etc. because the client is also often present as the service is
produced, provider-client interaction is a special feature of services
marketing. And Because the quality of services depends on who provides
them, when and where, and to whom, so the business must be have
Variability characteristic, such as new programs and celebrating days
expo, for examples Ritz-Carlton held pets day, consumer can bring their
pets to the hotels and living for a while. Finally, last characteristic is
Perishability, Ritz-Carlton can not avoiding this to be happened, services
cannot be stored, so their perishability can be a problem when demand
fluctuated. Several strategy can produce a better match between demand
and supply in a service business. On the demand side: Differencial Pricing,
Nonpeak Demand, Complementary Services and Reservation Systems.
And the supply side: Part-time Employee, Peak-time Efficiency, Increased
Consumer Participation, Shared Services and Facilities for Future
Expansion.

What customers want is personalized service, fast access to

knowledge, and hassle-free interactions. That, starts with employees. As
Melissa Young, a pastry chef at the Ritz-Carlton in Washington, D.C., joined
the discussion it became obvious to me that Ritz-Carlton employees stop
at nothing to make that service happen. Young told us about a time when
the front desk informed her of a family who was about to arrive at the
hotel. They drove all evening in a
blinding rain storm and arrived
later than expected. Young sent
up champagne and strawberries
for the adults and an assortment
of juices and warm cookies for
the children. "To see the
excitement in the kids was
priceless," Young said. "It's amazing to love what you do. The positive
energy starts from day one and continues every day. It's great to be part
of a winning team."3

In the other hand, managing service quality can be good activities, also to
see customer expectations from many sources, such as past experiences,
word of mouth, and advertizing. In general, customers compare the
perceived service with the expected service.If the perceived service falls
below the expected service, customers are disappointed. Succesful
companies add benefits to their ofering that not only satisfy customers
3 Data accessed on http://www.1to1media.com/view.aspx?DocID=30068&m=n,
March 4, 2009.
but suprise and delight them. Delighting customers is a matter of
exceeding expectations.
Based on the service-quality models, researchers identified the
following five determinants of service quality, in order to importance:4
1. Reliability
2. Responsiveness
3. Assurance
4. Empathy
5. Tangibles

4 Kotler, Phillip & Keller, Kevin L. Marketing Management 13th Edition. New
Jersey : Pearson Pretice-hall International Edition.