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 Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and 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 Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and 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 Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
 Characteristics of Service
Marketing

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

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and 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 Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
 Managing Service
Differentiation
• Solution to price competition

• Differentiation through people, physical

environment, and processes

• Differentiation through branding

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and 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 Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
 Managing Service
Productivity
• Train current employees
• Hire new ones who will work harder or more skillfully.
• Increase the quantity of their service
• “Industrialize the service” by adding equipment and
standardizing production
• Harness the power of technology

Be careful not to take the “service” out of service

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
 Resolving Customer
Complaints
• Problems will inevitably occur

• Keep the customer informed

• Provide service recovery options

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
 Managing Employees as
Part of the Product
• In the hospitality industry employees are a
critical part of the product and marketing mix.
This means that the human resources and
marketing departments must work closely
together
• The task of training and motivating
employees to provide good customer service
is called internal marketing

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and 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 Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
 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 Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
 Managing Capacity and
Demand (2)
• Involve the Customer in the Service-Delivery
System,
• Cross-Train Employees,
• Use Part -Time Employees,
• Rent or Share Extra Facilities and Equipment,
• Schedule Downtime During Periods of Low
Demand,
• Change the Service-Delivery System,
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
 Managing Capacity and
Demand (3)
• Demand Management,
• Use Price to Create or Reduce Demand,
• Use Reservations,
• Overbook,
• Revenue Management,
• Use Queuing,
• Create Promotional Events

©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens