Chapter Two: Hospitality and Tourism Service System

Chapter Outline:
2.1. The service culture
2.2. Characteristics of service marketing
2.3. Management Strategies for Service Business

Chapter Objectives:
By The End Of This Chapter, SWBAT:
 Discuss Service Culture
 Identify And Discuss Characteristics Of Service Marketing
 Discuss Management Strategies for Service Business
 Discuss components of tourism
“Managers do not control the quality of the product when the product is a service… the quality of the
service is a precarious state-it is in the hand of the service workers who produce and deliver it. “
Karl Albrecht

2.1 Service Culture

Tasks of a hospitality business is to develop the service side of the business, specifically, a strong service
culture.

Definition
Services are economic activities that create value and provide benefits for customers at specific times and
places as a result of bringing about a desired change in the recipient of the service. (Christopher
Lovelock)
Culture includes the values, beliefs, norms, rituals, and practices of a group or organization.
Values: enduring beliefs that a given behavior or outcome is desirable or good
Common Values in the Western World
 Materialism/Home
 Work and play
 Family and children
 Health/Youth
 Technology (Progress)
Any policy, procedure, action, or inaction on the part of your organization contributes to the service
culture. Many companies are product centered and view customers from the stand point of what company
products or services they use. Successful organizations are customer- centered and focus on individual
needs.
Service culture is a system of values and beliefs in an organization that reinforces the idea that providing
the customer with quality service is the principal concern of the business.
The service culture focuses on serving and satisfying the customer. It has to start with top management
and flow down.
A service culture empowers employees to solve customer problems. It is supported by a reward system
based on customer satisfaction.

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2.2 Characteristics of a service
 Tourism has all the characteristics of services.
A service is a time-perishable, intangible experience performed for a customer acting in the role of co-
producer. (James Fitzsimmons)
Service marketers must be concerned with four characteristics of services: intangibility, inseparability,
variability, perishables and non ownership.

1. Intangibility
Intangibility is a key determinant of whether an offering is or is not a service.
Very few products are purely intangible or totally tangible i.e, there are very few “pure services” or “pure
goods”
Services tend to be more intangible than manufactured products, and manufactured products tend to be
more tangible than services.
Unlike physical products, services can not be seen, tasted, felt, heard or smelled before they are
purchased.
E.g. Prior to boarding, an airline passengers have nothing but an airline ticket… promise of safe delivery
to their destination

“Some one who purchase the a service may go away empty-handed but they do not go away empty-
headed… they have memories that can be shared with others”-Robert Lewis.
The same is true in case of those tourists who visit a destination.
Members of a hotel sales force do not sell a room; instead, they 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.

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To reduce uncertainty caused by service intangibility, buyers look tangible evidences that will provide
information and confidence about the service.
The exterior of a restaurant and its cleanliness provide signals as to the quality of the intangible service.

2. Inseparability
In most hospitality services, both the service provider and the customer must be present for the
transaction to occur.
Customer-contact employees and customers are part of the product.
Customers and employees must understand the service delivery system, since they are both coproducing
the service.
The food in a restaurant, welcoming culture of the society, history of the destination… may be good, but
if the service person has a poor attitude, knowledge or provides inattentive service, customers will not be
satisfied with their experience. Wom will follow
Services are produced and consumed simultaneously in interactions between the customers and service
provider with no delay between the two. As a result the tourism provider has only one chance to ‘get it
right’- the option of replacing or returning the product which exists in relation to physical products is
excluded.

3. Service Variability/ Heterogeneity

Services are highly variable.
Their quality depends on who provides them and when and where they are provided.
There are several causes for service variability.
 Services are produced and consumed simultaneously, which limits quality control.
 Fluctuating demand makes it difficult to deliver consistent products during periods of peak
demand.
 It depends on the services provider’s skill/experience.
 Time/length of service/tiredness.
 Lack of communication and heterogeneity of guest expectation.
 It is difficult to standardize a service since it will differ because of variations in customer
experience and variations in peoples’ performance in delivering the service.
Macdonald’s, British Airways, Forte and other large tourism organizations attempt to overcome the
problem by standardization of operational procedures and training methods in order to reduce variation in
the human performance that constitute the service act.

4. Temporary ownership

The customer only owns a service temporarly (e.g. in retaining a holiday cottage, buying an aircraft seat,
paying for time in a museum).

5. Perishability
Service cannot be stored.
A service ‘dies’ if not consumed with in a given time. It cannot be stored. A package holiday, a hotel
room which have not been booked at eh time they are available are lost for good. Hence rapid demand

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shifts, typically through last minute price cutting, are necessary to reduce the lost revenue accruing from
unused capacity.

2.3 Management Strategies for Services Business

Services managers can do several things to increase services effectiveness in the face of intrinsic services
characteristics.
Successful services companies focus-
 Employees and customers.
They understand the service profit chain, which links service firm profits with employees and customer
satisfaction.

The chain consists five Links

1. Healthy service profits and growth- superior service firm performance.
2. Satisfied and loyal customers- satisfied customers who remain loyal, repeat purchase, and refer other
customer.
3. Greater Service Value- more effective and efficient customer value creation and service delivery.
4. Satisfied and productive service employees- more satisfied, loyal and hard working employees.
5. Internal service quality- superior employee selection and training, high quality work environment and
strong support for those dealing with customers.

All these suggests that service marketing requires more than just traditional marketing using 4Ps. It
requires internal and interactive marketing.
Hospitality jobs, which include hotel jobs, resort jobs, restaurant jobs and other foodservice jobs, require
constant positive interaction between individual employees and guests in order to establish a connection
that will keep the business thriving
 Internal marketing- the 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.
 Interactive marketing- perceived service quality depends heavily on the quality of buyer- seller
interaction during the service encounter.
Today as competition and costs increase, and productivity and quality decrease, more marketing
sophistication is needed.
Service companies face the task of increasing three major marketing areas: managing competitive
differentiation, service quality and productivity.
 Managing Differentiation- because of price competition, service firms need to develop
differentiated offer, delivery and image to outsmart rival firms.
The offer can include innovative features that set one company’s offer apart from its
competitors’. For example, airlines have introduced such innovations as in-flight movies,
advance seating, frequent-flier award programs, etc to differentiate their offers. Service
companies can differentiate their service delivery in 3 ways/3Ps/-through people, physical
environment and process. Finally, service companies can also differentiate their images through
symbols and branding.

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  Managing quality- deliver consistently higher quality than its competitors.
The key is to exceed customers’ service quality expectations. “Promise what you can deliver and
deliver more than you promise. Customer retention is perhaps the best measure of quality-a
service firm’s ability to hang on to its customers depends on how consistently it delivers value to
them. Thus, whereas the manufacturer’s quality goal might be zero defects, the service
provider’s goal is zero customer defections.

 Managing productivity- by training current employees better, hire new employees who will work
harder or more skillfully for the same pay, designing more effective services, etc.

1. Tangibilizing the product-

. Promotional material, employees’ appearance, and the service firm’s physical environment all
help tangiblize the service. Below are some of the ways which help to tangiblize the service
product.

Ways to tangiblize the service product:

 Trade dress- Is the distinctive nature of a hospitality industry’s total visual image and
overall appearance. The owner must design an effective trade dress while taking care not
to imitate too closely that of a competitor.
 Employee uniform and costumes- these have a legitimate and useful role in differentiating
one hospitality firm from another and for instilling pride in the employees.
 Physical surroundings- Physical surroundings should be designed to reinforce the product’s
position in the customer’s mind. You should avoid such things as sighns with missing
letters, burned-out lights, parking lots which are full of trash, etc.
 “Greening” of the hospitality industry - the use of outside natural landscaping and inside
use of light and plants has become a popular method of creating differentiation and
tangibilizing the product.

2. Managing employees-
The hospitality industry relies heavily upon its staff to deliver quality service at all times.
In the hospitality industry, employees are a critical part of the product and marketing mix.

3. Managing perceived risk-

The high risk that people perceive when purchasing hospitality products increases loyalty to
companies that have provided them with a consistent product in the past. One way of combating
concern is to encourage the client to try the product in a low-risk situation. Some service
companies also provide FAM trips to meeting planners and travel agents.

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 the business to operate at

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maximum capacity. Second, they must remember that their goal is to create satisfied customers.
Research has shown that customer complaints increase when service firms operate above 80% of
their capacity.

5. Managing consistency-
Consistency means that customers will receive the expected product without unwanted surprise. E.g. in
the hotel industry this means that a wakeup call requested at 7:00am will occur as planned.
"You get a lot of repeat customers, and a lot of that has to do with the quality and the consistency".

The traditional 4Ps marketing approach work well for goods, but additional elements require attention in
service business.
Rooms and Bitner suggested 3 additional 3Ps for service marketing: people, physical evidence and
process.
 People- for most services are prepared by people, the selection, training and motivation of
employees make huge difference in customer satisfaction.
 Physical evidence- a hotel will develop a look and style of dealing with customers that realize its
intended customer value proposition whether its cleanliness, speed or some other benefit.
 Process- the production process and organization system is also one element of customer
satisfaction.

2.4 Differences between tourism marketing and other services

Service tourism is different from the marketing of physical products. However, it also manifests
differences from other services. These differences include the following:

The marketing of services dependent much on interdependence of Marketing, Operations, and Human
Resources.

1. Principal products provided by recreation/tourism businesses are recreational experiences and

hospitality, on whether or not to visit your business or community.
2. Instead of moving product to the customer, the customer must travel to the product (area/community),
3. Travel is a significant portion of the time and money spent in association with recreational and tourism
experiences,
4. Tourism is more supply-led than other services.
Marketing begins with a bottom- up sequence of planning that starts with detailed analysis of the
customer, the market and the environment and only then does marketing planning begin. Tourism
marketing often reverses this pattern. Tourism tends to be supply-side rather than demand-side led.
Whereas produce in other service sectors such as finance and communication may be designed after
intensive research into consume requirements, tourism marketing is often a matter of taking an existing
place product and then determine who might be interested in purchasing it. The typical pattern in
destination marketing is for national or regional authorities first to decide that they wish to develop
tourism in their areas, and only after that decision to begin thinking on the potential customer/ tourist.

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5. The tourism product is frequently a multiple one involving cooperation between several
suppliers.
Tourism is often a combinatory produce which requires the deliberate or non-deliberate collaboration of
several different parties in providing the tourism products.

An inclusive package holiday, for example, involves a partnership between, at minimum, a transport
carrier, a tour operator, a accommodation supplier and a range of destination organization (car rent firms,
attractions).
Control over the product is thus dispersed and the shortcoming of one organization may adversely affect
the reputation of others (e.g. poor hotel food or airport delay may bring criticism on a tour operator who
set up a package holiday).

2.5 Components of Tourism

Tourism includes the following elements since it is not a single economic activity
1. Travel experience 2. Accommodations
3. Food 4. Beverage services
5. Shops 6. Entertainment
7. Aesthetics and 8. Special events

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