Marketing Chapter 2 Homework Managing Perceived Risk The High Risk That

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Chapter 2: Service Characteristics of Hospitality and Tourism Marketing

Chapter Objectives

1. Describe a service culture.

3. Explain seven marketing strategies for service businesses.

Teaching Suggestions

The following explanations and suggestions are outlined based on the Chapter Objectives.

1. Describe a service culture.

2. Identify four service characteristics that affect the marketing of a hospitality or

travel product.

Intangibility: Purchasers of hospitality and tourism product usually have nothing

physical to show at the end of their experience. Because the product is intangible

it is difficult to evaluate the product before purchase. Discuss with your class that

most products are a mix of tangible products and intangible products.

o In a restaurant, the meal is tangible. In a fast food restaurant, it is a large

Inseparability means all customer-contact employees become part of the product.

It also means customers become part of the product and we have to manage our

customer. You can ask students to give examples of when customers influenced

the satisfaction of other customers.

makes an excellent hamburger. Then ask them how many have been to

on the

second question.

Perishability: A restaurant which has a capacity of serving 400 customers and

only serves 100 on Monday night has lost the ability to serve those customers.

They cannot place the unserved 300 covers in inventory and sell them the next

night. A manufacturing company producing tangible goods can inventory goods,

thus they do not have to match capacity and demand in the short term.

3. Explain seven marketing strategies for service businesses.

Today as competition and costs increase and as productivity and quality decrease, more

marketing sophistication is needed. The seven marketing strategies include:

Managing Service Differentiation: Service companies can differentiate their

service delivery through the people that work for them, their physical

environment and their service delivery process. British Airways example.

Resolving Customer Complaints: A company cannot always prevent service

Managing Employees As Part Of The Product: The manager must hire friendly

and capable employees and formulate policies that support positive relations

Managing Perceived Risk: Customers who buy hospitality products experience

Chapter Outline

I. The Service Culture. The service culture focuses on serving and satisfying the customer.

The service culture has to start with top management and flow down.

II. Five Characteristics of Services [Slide 2-3]

A. Intangibility. Unlike physical products, services cannot be seen, tasted, felt, heard,

or smelled before they are purchased. To reduce uncertainty caused by

confidence about the service.

B. Inseparability. In most hospitality services, both the service provider and the

C. Variability. Service quality depends on who provides the services and when and

III. Service Management Concepts

A. Service Profit Chain [Slide 2-5]

B. Types of Marketing [Slide 2-6]

1.Internal Marketing

IV. Management Strategies for Service Businesses [Slide 2-7]

A. Managing differentiation. The solution to price competition is to develop a

B. Managing service quality. With hospitality products, quality is measured by how

E. Managing employees as part of the product. In the hospitality industry, employees

are a critical part of the product and marketing mix. The human resource and

F. Managing perceived risk. The high risk that people perceive when purchasing

hospitality products increases loyalty to companies that have provided them with

Answers to Discussion Questions

1. Illustrate how a hotel, restaurant, or theater can deal with the intangibility,

inseparability, variability, and perishability of the service it provides. Give specific

examples.

Assign students to four groups and have each group discus one of the service

characteristics. Ask each group to present their own interpretation of their assigned

service characteristic and provide examples.

For example, a hotel can ensure that the product being offer is well maintained,

clean and is suitable for the image it is trying to project in its customers minds.

2. Do you use consumer-generated content from a site like TripAdvisor or Yelp, if so

explain why you think the information is credible. If not state how you choose a new

restaurant. If other consumers acquire information the same way you do, how

should managers attract new customers?

This can be an interesting assignment and/or class discussion. Ask students to plan

3. Discuss how the service person in a restaurant is part of the product the customer

receives when purchasing a meal.

Lead students to answer this question by thinking about not only the technical quality (the

quality of the food) but also the functional quality (the service provided in the restaurant)

of the service.

The service provider is the service. They provide the food product to the customer

and aid in the money transaction. If there is a problem, they must solve it. If there

is a need, they must try to fulfill it. In this respect, the service person is integral to

the process. This is illustrated by the inseparability and variability of the industry.

o Therefore, the evaluation of the service by the customer will be, in large

Overall, the employees, atmosphere, and delivery of the service all have to be

4. Look up several hotels or restaurants on TripAdvisor and review customer

comments. Do you think the managers of the company responded to the comments

5. What are internal and interactive marketing? Give an example of how a specific

firm or organization might use these concepts to increase the effectiveness of its

services. How might these concepts be linked to services differentiation?

Internal marketing is directed toward the internal customers of the company, the

o For example: Ritz-Carlton empowers its employees to handle problems on

the spot, without consulting higher-ups. Each employee can spend up to

o Furthermore, Ritz-Carlton also recognizes and rewards employees who

perform outstanding feats. For example, the winners of its Five-Star

Interactive marketing means that perceived service quality depends heavily on the

quality of the buyer seller interaction during the service encounter. In product

marketing, customer perception of product quality rarely depends on how the

product is obtained. In services marketing, however, service quality depends on

both the service deliverer and the quality of the delivery. A firm may implement

proper policies, procedures and adequate training programs to address both

internal marketing and interactive marketing to increase the effectiveness of its

services. The standards set by these initiatives determine the level of service,

which acts as a natural differentiator with respect to other competitors.

o Ritz-Carlton trains its customer-contact people to greet guests by their