Week 1

The Nature of Service

Learning Objectives
• Important differences between making products and serving guests.
• The importance of meeting the hospitality guest’s expectations.
• The importance of the guest experience.
• The components of the guest experience.
• The definition of service quality and service value in the hospitality field.
• The reasons why “it all starts with the guest.”

Reference:
Ford, R.C. & Sturman, M.C. 2020. Managing Hospitality Organizations: Achieving Excellence in the Guest Experience, 2nd Edition, SAGE Publications, Inc. (Chapter 1)

Zeithaml, V.A., Bitner, M.J. & Gremler, D.D. (2018). Services marketing: Integrating customer focus across the firm, 7 th Edition, New York: McGraw-Hill Education. (Chapter 1)

Fitmzsimons, J.A., Fitzsimmons, M.J. & Bordoloi, S.K. (2014) Service management: Operations, strategy, information technology, 8th Edition, New York: McGraw-Hill Education.
(Chapter 1)

1
Ford, R.C., Sturman, M.C. & Heaton, C.D. (2012) Managing quality service in hospitality: How organisations achieve excellence in the gust experience. Delmar: Cengage
Learning. (Chapter 1)
Hospitality Industry

Hospitality industry is made up of organisations that

offer guests courteous, professional food, drink, and
lodging services.
Hospitality also includes:
– Theme parks
– Airlines
– Gaming
– Cruise ships
– Trade shows
– Meeting planning
– Conventions
Guestology

 Guests are studied

 Behaviors observed
 Wants, needs, and expectations discovered
 Service product tailored to meet demands
 Guestology means the organization’s employees
must treat customers like guests and manage the
organization from the guest’s point of view.
 Guestology makes good business sense to increase
guest satisfaction, that lead to repeat businesses from
customers and in return drives organization’s
revenues up
Guestology

• The organization’s strategy, staff, and systems are

aligned to meet or exceed the customer’s expectations
regarding the three aspects of the guest experience:
– Service products
– Service setting ( also called service environment / servicecape)
– Service delivery
Guestology

• Traditional management thinking focus on:

– Organisational design, managerial hierarchy, and production
systems to maximize orgnaisational efficiency

• Guestology forces organization to focus at systematically the

guest experience from the customer’s / guest’s point of view.
– What customers do and want are first systematically studied,
modeled, and predicted.
– The rest of the organizational issues will be addressed Service
products
– The key goal is to meet customer’s expectation and still make a
profit
The Guest Experience

Guest experience = service product + service

setting + service delivery system

Components of the guest experience:

 The service product/service package or
service/product mix, is why the customer, client, or
guest comes to the organization in the first place
 The basic product (Tangible) i.e. a hotel room, or
(intangible) i.e. a rock concert
The Guest Experience

Guest experience = service product + service

setting + service delivery system

 The service setting/environment in which the

experience takes place.
 Servicecape – the landscape within which service is
experiences, has been used to describe the physical
aspects of the setting that contribute to the guests’ overall
physical feel of the experience
The Guest Experience

Guest experience = service product + service

setting + service delivery system

 The service delivery system include the human

components (i.e. the restaurant server who serve the
meal on the table) and the physical production
processes (i.e. the kitchen facilities in the restaurant)
plus the organizational and information systems and
techniques that help deliver the service to the
customer.
Service

• Service
– Is as the intangible part of transaction relationship that creates
value between a provider organization and its customer, client, or
guest
– Is deed, process and performance
– Is an activity or series of activities of more or less intangible nature
that normally but not necessarily, take place in interactions between
customer, service employee and or physical resources / goods
and/systems of the service provider, which are provided as
solutions to customer problems.
– Can be provided directly to the customer (i.e. hair cut) or for the
customer (i.e. car repair)
– Can be provided by a person (i.e. service provider in the restaurant)
or vis technology (i.e. ATM)
Service

Service industries and includes those industries and companies typically classified
companies within the service sector where the core product is a service

Marriott International Lodging

American Airlines Transportation
Charles Schwab Financial services
May Clinic Health Care
Service as a product represents a wide range of intangible product offerings
customers value and pay for in the marketplace. Service
products are sold by service companies and by non service
companies

IBM & Hewlett-Packard Offer information technology consulting services

PetSmart Sell pet grooming & training services
Service

Customer service is the service provided in support of a company’s core products

and companies typically do not charge for customer service
On-site i.e. when a retail employee helps a customer find a desire item or
answers a question
Phone 24/7 call center
Internet Through chat in real time
Machine-to-machine ATM
Derived service All products and physical goods are valued for the service they
provide. The value derived from physical goods is really the
service provided by the good, not the good itself.
Pharmaceutical drug Medical service
Razor Barbering service
Computers Information and data manipulation service
Service

 Goods to Services to Experiences

 WE have now moved from an industrial economy to a service
economy, and now transitioned to an experience economy
 From acceptable goods to memorable experiences

• Understanding the Guest

− the traditional demographic breakdowns of age, race, gender, and
guests’ home locations
− The psychographic breakdowns of how they feel, what their
attitudes, beliefs, and values are; and what kind of experience they
need, want and expect the hospitality organization to deliver
− The capabilities (their knowledge, skills, and abilities [KSA]) to
coproduce the experience
Service
Interaction Relationships between
Customer and Service Provider

Service • Hospitality • Lawn service

provider • Medical • Watch repair
present • Professional
Service
• Electric/gas utilities • Answering services
provider not • ATM • TV security services
present • Vending machines
Customer present Customer not present
 Service & Technology
• New ways to deliver service
• Technology facilitates basic customer service functions (bill paying,
questions, checking account records, order tracking), transactions (both
retail and business-to-business), learning or information seeking.
• Technology facilitates transactions by offering a direct vehicle for making
purchases and conducting business.
• The Internet, provides an easy way for customers to learn, do research,
and collaborate with each other.

• Enabling both customers and employees

– For customers - Through self-service technologies, customers can
serve themselves more effectively.
– For employees - Customer relationship management and sales
support software are broad categories of technology that can aid
frontline employees in providing better service.
 Service & Technology

• Extending the Global Reach of Services

– The Internet itself knows no boundaries, and therefore information,
customer service, and transactions can move across countries and
across continents, reaching any customer who has access to the
Internet.
– Technology also allows employees of international companies to
stay in touch easily—to share information, to ask questions, to
serve on virtual teams together.

• The Internet is a Service

– Giving information, performing basic customer service functions,
facilitating transactions, or promoting social interactions among
individuals.
– dependable outcomes, easy access, responsive systems, flexibility,
apologies, and compensation when things go wrong.
Characteristics of Service

 Partly or wholly intangible

 Simultaneous production and consumption
 Heterogeneity
 Perishability
Characteristics of Service
Characteristics of Service

 Partly or wholly intangible

 Services are performances or actions that cannot be seen,
felt, tasted, or touched
 Services are ideas and concepts, therefore, easily be copied
by competitors; it follows services innovations are not
patentable
 Customers must rely on the reputation of the service firm
 Services cannot be inventoried due to capacity constraints,
and therefore, fluctuations in demand are often difficult to
manage
 Services cannot be readily displayed or communicated
 Pricing is difficult – the actual costs of a ‘unit of service’ are
hard to determine, and the price-quality relationship is
complex
Characteristics of Service

 Simultaneous production and consumption

 Services are created and consumed simultaneously, thus,
cannot be stored is a critical feature in the management of
services
 Services, operate as open systems, with the full impact of
demand variations being transmitted to the system
 Services are sold first and then produced and consumed
simultaneously
 Customers will frequently interact with each other during the
service production process and thus may affect each other’s
experience
 In services, the corresponding problem is customer waiting;
or ‘queuing’. The problem of selecting service capacity,
facility utilization, and use of idle time all are balanced against
customer waiting time
Characteristics of Service

 Heterogeneity
 The combination of the intangible nature of services and the
customer as a participant in the service delivery system
results in variation of service from customer to customer
 Services are performances, frequently produced, consumed,
and often co-created by humans, no two services will be
precisely alike
 The employees delivering the service frequently are the
service in the customer’s eyes, and people may differ in their
performance from day to day or even hour to hour
 No two customers are precisely alike; each will have unique
demands or experience the service in a unique way
 Services are often co-produced and co-created with
customers, customer behaviours will also introduce variability
and uncertainties
Characteristics of Service

 Perishability
 Services cannot be saved, stored, resold, or returned
 Services are difficult to synchronise supply and demand
- - consumer demand for services typically very cyclic
behaviour over short period of time, with considerable
variation between the peak and valleys
 A service cannot be stored, it is lost forever when not
used.
 Services for any given time-period cannot be sold or
delivered at a later date
The Services Marketing Triangle
Service Marketing Mix
The Service Package

• The service package is defined as a bundle of goods

and services with information that is provided in some
environment. This bundle consist of 5 features:
1. Supporting facility
2. Facilitating goods
3. Information
4. Explicit services
5. Implicit services
The Service Package

 Supporting facility
 The physical resources that must be in place before a service can be offered,
for example, a golf course, a hospital, and an airplane.
 Facilitating goods
 The material purchased or consumed by the buyer, or the items provided by
the customer, for examples, golf clubs, food items, legal documents and
medical supplies.
 Information
 Data that is available form the customer or provider to enable efficient and
customised service, for examples, electronic patient medical records, airline
showing seats availability on a flight, GPS-website location of customer to
dispatch a taxi, or Google map link to a hotel website.
 Explicit services
 The benefits that are readily observable by the senses and that consist of the
essential or intrinsic feature of the service, for examples, the absence of pain
after a tooth is repaired.
 Implicit services
 Psychological benefits that customer may sense only vaguely, or extrinsic
features of the service, for example, the privacy of a loan office, worry-free
auto repair.
Quality, Value & Cost
• The quality of the entire guest experience is defined as the difference
between quality guest wants and quality guest gets
– If ‘wants’ =‘get’, then quality is average or as expected; guest got what
he/she expected and he/she is satisfied
– If guest got more that he/she expected, quality was +ve
– If guest got less that he/she expected, quality was –ve

Qe = Qed –Qee
(Quality of the guest experience)= Qe ; (Quality Delivered) = Qed; (Quality expected) = Qee

 Quality as perceived by guest will be affected by changes in guest

expectations or organizational performance
 High Qe → the guest had a exceptional and memorable service experience
 Quality is independent of cost or value
 Quality can be high and cost also high; quality can be high and cost low, etc.
Quality, Value & Cost

• The Value of the guest experience is equal to the quality of

guest experience divided by all costs incurred by guest to obtain
experience
Ve = Qe / all costs incurred by guest

• If the quality and cost of the experience are about the same, the
value of the experience to the guest would be normal/expected,
the guest would be satisfied by this fair value but not wowed.

• Low quality and low cost, high quality and high cost, satisfy the
guest about the same, because they match the guest’s
expectations.

• Organisations adding value to their guests’ experiences by

providing additional features and amenities without increasing
cost to guests.
Quality, Value & Cost

Cost includes:
• Price (i.e. the price of the meal)
• Opportunity costs/quantifiable costs
• Time expenditures (i.e. time spent getting to the restaurant, waiting
for a table, waiting for service)
• Risks (i.e. restaurant cannot meet expectations, etc)
• Tangible and intangible / Financial and nonfinancial costs comprise
the “all costs incurred by guest”
• Cost of quality is not how much it costs the organization to provide
service quality at a high level but of how little it costs compared to
the cost of not providing quality.
Who Defines Quality and Value?

• Service is intangible and guests expectation are variable,

therefore, no objective determination of quality level
• Only guest can define quality and value in hospitality
field