HTM 3103 Consumer Behavior for Tourism & Hospitality

1. HTM 3103 Consumer Behavior for Tourism & Hospitality Hospitality as services Chapter 2

2. Developed by A. KalyakornTaychanavakul Objectives • This chapter focused on the consumption of services on consumers of hospitality • How is the consumption of services different from that of other goods? • It will be discussed with their associated characteristics

3. Developed by A. KalyakornTaychanavakul Hospitality as services • Service industries are playing an increasingly important role in developed economies and now account over 70 percent of employment (To be updated on world’s GDP and Thailand’s GDP) • It is anticipated that the service sector will continue to grow, led by: • Increasing living standards, particularly in western economies and emerging countries • Rapid technological advancement

4. Developed by A. KalyakornTaychanavakul The nature of products, goods and services Products • Are at the center to all forms of marketing or 4 Ps Thereby, it has been extensively defined and evaluated • Was defined by Philip Kotler as, ‘anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organization, and ideas" (Philip Kotler, 1984)

5. Developed by A. KalyakornTaychanavakul Goods and services • Goods are tangible objects that exist in both time and space (devices, things or objects) • Services consist solely of acts or processed, cannot be posed but can only be experienced, created or participated in (deeds, performances or efforts) • ‘Services encompasses any activity or benefit that one party can offer to another, that is essentially intangible and does not result in ownership of anything’ • Philip Kotler, 1994 • Therefore, for goods, it could be owned but not for services ( lack of ownership)

6. Developed by A. KalyakornTaychanavakul Characteristics of services • 1) Intangibility • Consumers cannot see, touch, hear, smell or taste hospitality services before purchase • One problem is , it is more risky when consumers still never consume the services  sometimes, consumers decide not to buy if they still never use it • Tourism companies have tried to overcome this problem by offering the consumer videos of holiday locations to make the experience seem more‘ real‘ can only experience their performance • Performance of services can be experienced in terms of totality • This means , the overall consumption is made up of more than simply tangible products ,e.g. considering the ways in which we use a hotel, while there are a number of tangible elements to its use (for example, the bed, the restaurant, the bar, the food, sports & fitness facilities etc.,) NOT ONLY THAT, overall consumption would include the atmospherics, relationships with staff and other customers ( e.g. friendliness, during queuing or within the restaurant), our ongoing feeling of (dis)satisfaction • the most important factor which distinguishes products from goods

7. Developed by A. KalyakornTaychanavakul 2) Inseparability • Being produced and consume simultaneously , therefore, Lack of distinction between delivery and use • Inseparability between consumers and service provider – Hospitality services by their nature are based on: • high level of customization • high level of human interaction • This is to focus on needs and wants of consumers as much as possible , e.g. imagine when you visit bars, clubs, or restaurants, hotel concierge • And this leads to the problems of service standardization -- services cannot be standardized , cannot gain economies of scale in the same way goods can • And this led to the next characteristic, which is, heterogeneity

8. Developed by A. KalyakornTaychanavakul 3) Heterogeneity (variability) • Refers to less ability to develop uniformity and standardization (unlike goods) • Services are seen to be variable , while goods are more uniform • The more uniformity, the easier to standardized • Services are highly subjective • not consistent due to variability in individuals ( both service provider and consumer) the mood, the time of the day, other factors, e.g. the internet goes wrong , not enough staff and out of stock products • Examples for variability in each individual • For the service provider : service minded or not, ability to deliver a high standard service , time of the day • For the consumers , change in perception how they perceive and expectation of what is good service • Therefore, In hospitality services, it is difficult to tell that services will be delivered with high standard at all time

9. Developed by A. KalyakornTaychanavakul 4) Perishability • Services cannot be stored, unlike goods , therefore, unused capacity is lost forever • Demand fluctuations have made demand to be very difficult to manage  very different demands during different time Peak and off-peak time period Peak time = The time with the most highest demand Off-peak time = The time with the least demand • E.g. Restaurants usually has its peak time in the evening while in the afternoon is off-peak ( very quiet) , this can lead to very different experiences towards consumers  therefore, some restaurants offer a set menu during lunch and afternoon and just a‘ la carte for dinner • targeting at business travellers and students on holiday during weekdays, leisure travellers during weekends , For some spa outlets, offering special rate at different time of the day ( For off-peak time, offering a special rate to attract more consumers in order to manage demand better)

10. Developed by A. KalyakornTaychanavakul 5) Lack of ownership • Both before and after consumption • Before : consumers only has access to it when buy the service • After : consumers never owns anything at the end of the transaction, except ,‘experience‘ which often leads to a feeling of satisfaction ( if the overall experience was good) – this means that, the purchase of service will have a considerable emotional significance for the consumer

11. Developed by A. KalyakornTaychanavakul Consuming services: the moment of truth • The moment of truth is a combination between expectation (of consumers whether it can be fulfilled or not), experience and knowledge in an interaction between consumer and staff • The moment of truth : the point at which consumers come into contact with the service provider • This is the critical success factor for service firms.WHY?

12. Developed by A. KalyakornTaychanavakul Consuming services: Dimensions which impact on CB • Time • Within hospitality, consumers go through a number of members of staff many times during the course of service • e.g. For the hotel stay – it can be many days or couple of weeks. All these interactions will offer the consumer different experiences over a long period of time. • Peak time and off peak time can also affect the level of service provided , e.g. not enough capacity or staff • Overall services experiences of customers are the key to determine whether individuals have a good or bad service experiences, not only one-time judgment

13. Developed by A. KalyakornTaychanavakul Physical proximity • Service encounter can be classified into 3 types : • Face-to-face ; e.g. occur in a reception areas – enabling a great degree of customization • Remote ; e.g. automated, quick check-out billing systems in many busy airport hotels and business hotels ( guest check their own bills on in-room televisions, carry on their own luggage to the exit and pay by credit card at the machine in the hallway) -- the richness of experience and high level of customization were much lessened • Remote personal encounter ; e- commerce – e.g. hotel reservation online, 24 hours online chat live ( customer service) -- problems in not enough staff, cannot answer highly customized questions and system failure

14. Developed by A. KalyakornTaychanavakul Co-producing services by the customers • Closely related to aspects of customization and physical proximity, in that, customers are increasingly required to co-produce the service • This can lessen the impact of demand fluctuation during peak time , customer can avoid bad experiences , e.g. long waiting queue by automated check out mentioned earlier

15. Developed by A. KalyakornTaychanavakul Degree of involvement • Different degrees of engagement by customers by different types of services • The more the consumers could involved, e.g. complaining after feeling dissatisfied, it is more likely that they would come back again

16. Developed by A. KalyakornTaychanavakul Degree of customization Could be defined as : • 1)The degree to which a customer interacts with the service ( depends on the degree that a customer can intervene in the service) • 2)The degree to which a service is altered for specific customers ( depends on the degree to which a service can be customized) • The higher the better , in order to fulfill needs and wants of customers and make them satisfy

17. Developed by A. KalyakornTaychanavakul Service providers • ‘People‘ or Hospitality staff are critical in creating customer‘s experience for service • The employee is seen by consumers as a representative of an organization or service firm, e.g. restaurants are judged by the performance of the host, the server , and the billing staff • These are in turn directly affected by such factors as expertise, attitude, and demography (e.g.age, sex, income, nationality, etc.,) • Each individual is different, therefore, service industry always experience inconsistency in delivering good service

18. Developed by A. KalyakornTaychanavakul Setting • Encouraging approach or avoidance responses among consumers • Therefore, in Hospitality, physical design, atmospherics, on going activities are often important