Lesson 2

Service Characteristics of Hospitality and Tourism Marketing

Four Characteristics of Service

1. Intangibility

Unlike physical products, services cannot be seen, tasted,felt, heard, or smelled before they
are purchased. To reduce uncertainty caused by intangibility, buyers took for tangible evidence that
will provide information and confidence about the service

“Members of a Hotl sales force cannot take a hotel room with them on sales call. In fact,
they do not sell a room instead they only sell the right to use a room for a specified period of time.
When hotel guests leave, they have nothing to show for the purchase but a receipt. They go away
empty-handed but not empty-headed. They have memories that cannot be shared with others.

2. Inseparability

In most hospitality services, both the service provider and customer must be present
for the transaction to occur. Customer-contact employees are part of the product. The third
implication of inseparability is that customers and employees must understand the service delivery.
Service inseparability also means that customers are part of the product. Customers and employees
must understand the service delivery system, since they are both coproducing the service.
(Hospitality- Tourism)

3. Variability

Service quality depends on who provides the services and when and where they are
provided. Services are produced and consumed simultaneously. Fluctuating demand makes it
difficult to deliver consistent products during periods of peak demand. The high degree of contact
between the service provider and the guest means that product consistency depends on the service
provider's skills and performance at the time of exchange.

4. Perishability

Service cannot be stored. If service providers are to maximum revenue, they must
manage capacity and demand because they cannot forward inventory.

Management Strategies for Service Business

1. Tangibilizing the service firm's physical environment all help tangibilize service.

a. Trade dress

Trade dress is a distinctive nature of Hospitality industry's total visual image and
overall appearance. To complete effectively, an entrepreneur, operator, or owner must design an
effective trade dress while taking care not to limit to closely that of a competitor.
b. Employee uniform and costume

Uniforms and costumes are common to hospitality industry. These have a legitimate
and useful role in differentiating one hospitality firm from another and for instilling pride in the
employees.

c. Physical Surroundings (ambiance)

Physical surroundings should be designed to reinforce the products positions in the

customer's mind. A firm's communication should also reinforce their positioning.

d. Greening of the Hospitality Industry

The use of outside natural landscaping and inside use of lights and plants has
become a popular method of creating differentiation and tangibilizing the product.

2. Managing Employees

In the Hospitality industry, employees are critical part of the product and marketing mix. The
human resource and marketing department must work closely together.

 Company
 Internal Marketing
 Employees
 External Marketing
 Customers
 InteractiveMarketing

Three types of Marketing in Service Industries

• Internal Marketing

- means that service firm must effectively train and motivate its customer-contact
employees and all the supporting service people to work as a team to provide customer satisfaction.
Everyone else in the organization must practice marketing. The task of internal marketing to
employees involves the effective training and motivation os customer-contact employees and
supporting service personnel.

• Interactive Marketing

- means that percieved service quality depends heavily on the quality of the buyer-seller
interaction during the service encounter.

3. Managing Perceived Risk

The high risk that people percieve when purchaising hospitality products increases
loyalty to companies that have purchased that have provided them with a consistent product in the
past.
4. Managing Capacity and Demand

Because services are perishable, managing capacity and demand is a key function of
hospitality marketing. First, services must adjust their operating systems to enable to business to
operate at maximum capacity. Second, they must remember that their goal is to create satisfied
customers. Research has shown that customer complaints increases when service firms operate
above 80 percent of their capacity.

5. Managing Capacity

Consistency means that customers will receive product without unwanted surprises.
Fluctuating demand can affect consistency. Although it is impossible to eliminate variability
completely, managers should strive to develop as consistent a product as possible. Today's
customers are knowledgeable and have come to expect and demand consitency.
 Lesson 3
Marketing Environment

MICROENVIRONMENT - The microenvironment consists of factors to the company that affects its
ability to serve its customers.

Micro-environment factors that affects the business

SUPPLIERS - COMPANY – MARKETING INTERMEDIARI - customer

The company - Marketing managers work closely with top management and the various company
departments. Under the marketing concept, all managers, supervisors and employees must "THINK
CUSTOMER". The must learn to work in harmony.

Suppliers - They are the firms and individuals that provide the resources needed by the company
to produce its goods to the final buyers.

Marketing intermediaries - They are firms that help the company promotes, sell and distribute its
goods to the final buyers.

Transportation system - The system moves the product from the factory to the customer. The
hospitality industry depends on transportation system to move supplies and customers to their
businesses.

Market services agencies - Marketing research firms, advertising agencies, media firms, and
marketing consulting firms help companies to target and promote their products to the right market.

Financial intermediaries - This includes banks, credit companies, insurance companies and other
firms that help hospitality companies to finance their transactions or insure risk associated with the
buying and selling of goods and services.

Macroenvironment - It consists of the larger societal forces that affect the whole microenvironment
demographic, economic, natural, technological, political and cultural forces.

1. Competitive Environment - Each firm must consider its size and industry position in relation
to its competitors. A company must satisfy the needs and wants of consumer better than its
competitors do in order to survive.

Three variables when analyzing competitors

 Share of Market – the competitor’s share of the target market

 Share of Mind – the percentage of the customers who named the competitor in
responding to the statement, “Name the first company that comes to mind in this
industry.
 Share of Heart – the percentage of the customers who named the competitor in
responding to the statement, “ Name the company from whom you prefer to buy
product.”

Every company faces four levels off competitors

  A company can view its competitors as other companies that offer similar products and
services to the same customers at a similar price.
 A company can see its competitors as all companies making the same product or class of
products.
 A company can see its competitors more broadly as all companies supplying the same
service.
 A company can see its competition even more broadly as all companies that compete for
the same consumer money.

Competitions - Barriers to Entry, Exit and Competition.

Demography Environment - is the study of human population in terms of size, density, location, age,
sex, race, occupation and other statistics. The demographic environment is of major interests to
marketers because markets are made up of people.

Baby Boomers (1946-1964)

Yuppies – young urban professionals

Bumpies – black upwardly mobile professionals

Yummies – young upwardly mobile professionals

DINKs – dual income, no-kids couples

DEWKs – dual earners with kids

MOBYs – mother older, baby younger

WOOFs – well-off older folks

GRUMPIES –just what the name suggests

Generation X (1965- 1976)

• Also called baby busters, shadow generation, yiffies-young individualistic, freedom-minded

few
• Grown up during the times of recession
• More cautious economic outlook
• Care about environment, respond favorably to socially responsible companies
• Also known as MTV generation

Generation Z (1977 – 1994)

• Echo boomers
• Utter fluency and comfort with computer, digital and internet technology
• Net-Gens or N-Gens
• Likes comfort foods
 2. ECONOMIC ENVIRONMENT - The economic environment consists of factors that affect
consumer purchasing power and spending patterns

Changes in Income

• 1980 – “roaring eightiers”

• 1990 – “squeezed consumers”
• 2000 – value marketing continues

Income Distribution

• Upper Class – spending patterns are not affected by current economic events and a major
market for luxury goods.
• Middle Class – careful about its spending but can still afford the good life some of the time.
• Working Class – must stock close to the basics of food, clothing and shelter and must try
hard to save
• Underclass – must count their pennies when making even the most basic purchases.

• Income Distribution- “Over the past three decades, the rich have grown richer, the middle
has shrunk and the poor have remained poor”

4. NATURAL ENVIRONMENT - It consists of natural resources required by marketers or affected

by marketing activities.

5. TECHNOLOGICAL ENVIRONMENT --The most dramatic force shaping our destiny is

technology.

6. POLITICAL ENVIRONMENT -It is made up of laws, government agencies and pressure groups
that influence and limit various organizations and individual and society.

7. CULTURAL ENVIRONMENT- It included institutions and other forces that affect society’s basic
values, perceptions, preferences and behaviour.

Responding to the Marketing Environment

Many companies view the marketing environment as an “uncontrollable” element which

they must adapt. Other companies take an environmental management perspective. Rather
than simply watching and reacting, these firms take aggressive actions to affect the publics and
forces in their marketing environment. These companies use environmental scanning to monitor
the environment.
Lesson : 2 Applied business tools & Technologies

INTRODUCTION

One of the main resources available for manager in tourism and hospitality industry is
information. Within an organization’s environment, it is the common knowledge that computer
information is used not only by managers but also by the non-managers. In fact, some of those at
the lower level of the organization also use computer information in providing services to the
customers. These people are found anywhere in an organization’s circle of influence.

Managers who perform functions and play roles necessary for the growth of the organization
need to be proactive in terms of information management. Thus, in this sense, skill and
communication and problem solving are very important. Not only these but, managers should also
be computer literate, which means are able to utilize computer for the business transactions and
decision making. Most importantly, managers should be information literate as this is where
information system will come into use.

Management of Information

If you are a manager of a hotel’s boutique in the lobby, managing it would be easy. You can
manage it by merely observing the tangible assets which in this case the merchandise, the POS or
point of sale (cash register), the area where the boutique is located, the person dealing with the
guest concerns or orders, and of course the guest flow. However, in the most complex part of hotel’s
operation, observation will never be a practical step to manage it. Imagine the number of employees
a hotel have, the types of services offered, the number of rooms that need to be sold, the ancillary
services that needs more information for decision making and problem solving.

Managers of hotels will need information or reports from various department to show the
physical condition of the organization. They will not go on a per section basis just to observe what is
going on and how is that section doing. They will regard more importantly on information that these
are valuable resource for them. Information that is no longer useful is replace by those that are
current and important so decision making or problem solving will be accurate.

• Collecting
• Processing
• Using
• Disposing
Figure 2.2 information management in tourism and hospitality industry

The first stage will be to gather information from various departments. This information
came from the normal reports of respective departments but many include new data,
depending on its availability.
Once the data is gathered, the next stage is to process it. Processing may include
analyzing it, comparing it with the previous data gathered, and other means in order to
arrive at a sound decision.
 The moment data have been processed, it can now be used for decision making, and
for whatever purpose it may serve to the organization. This should be used effectively so
that decision are right and suited to a particular situation.
Disposal of data is necessary when these are no longer needed or are no longer useful.
Disposal may be in the form of shredding hard copies, deleting soft copies, or can be saved
in a compact disk for retrieval in time that this will be needed. Some companies may hold
data for five (5) years, depending on its nature and type.
Organization’s Main Resources
Hotels, resorts, restaurants and other related establishments have main resources by
which managers need to manage in order for them to be used in the most effective way.
These are the following:

• manpower - Those people who frontline the services or products offered

• money- Financial resources used to operate business
• materials- Those used to render service of produce products
• machines - Equipment used in the opefacilities ration including and energy

As reflected above, these are the four main resources a manager could touch or
hold as they are tangible. They exist physically so managers can see and judge them
by looking at them. What does that mean?

Let’s have an example:

When an employee is not complying with an organization’s standard operating procedures,

a manager can judge immediately whether that employee will be replaced or will be undergo a
performance improvement program.

When a machine, on the other hand, is not working, a manager may judge as to repairing or
replacing it.

On adding finances to a project in the company can also be an option as judgement can easily
be made if the need isseen.

However, in the above examples, a manger cannot just easily decide without looking at
reports of various departments. A manager should look into the information from the reports given
by different departments in order to arrive at a most possible and sound decision. This is where the
fifth resources comes into play, the information from the various departments as shown in the
following representation

The information as a resource is very important not on its tangibility but on what it
represent where managers can derive inputs to be used in their decision making. This resource as
well serves as “manager” of the rest the resources mentioned herein.
 Need for Information Management

It was discussed in the first chapter that the tourism and hospitality industry offers a
variety of services and products. More employees are needed, and the challenges of meeting the
clients requirements are not that easy. Given these, the complexity of the industry may not be
addressed without the use of information management system.

Lets have the following representation for us to better understand this:

Not practical!!!

• Reserving a hotel accomodation done manually and wait for 10 to 30 minutes to

complete it?
• Waiting for the cashier to present the bill as being computed through a calculator
for 10 mins?
• Booking a flight to a destination for about 30 mins because availability is checked in
the hard copy reservation record

The need for information management is not only for the tourism and hospitality industry, but for
all types of businesses. Managers, especially those at the top management or executive levels, pay
attention to information management because of these two reasons found in the following table.

Complexity of Business Processes

From single proprietorship to corporations, it’s processes or activities will never stay as it is.
Increasing complexity is possible especially nowadays that competition is really challenging. For you
to compete the industry and thrive in the business arena, it is important that you deal with it’s
complexity. This means that, the business should always be prepared to stay in the competition.

Usefulness of Computer Capabilities

It is no doubt that computers continue to make a business life easier. The fastest way to
keep track of business records is through this equipment, thus, an important consideration.
Networked computers make the operations activities more accessible especially those operating as
chains, whether they’re company-owned, or franchised. Without computers process will surely
become a disaster as speed it offers cannot be given by human resources.