Chapter Two

1. Chapter Two Marketing Services and the Hospitality Experience

2. Why Is the Marketing of Services Different? • Differences between goods and services • Intangibility • Heterogeneity • Simultaneous production and consumption • Perishability

4. Customers Impacts quality due to fluctuations Impacts availability as management creates demand Price goes down when inventory gets high Marketers Must have ability to satisfy customers when demand dictates Challenge to manage supply/demand Cost control during low demand makes for difficult choices Perishability

5. Customers Needs are different Have various amounts of knowledge, experience, and proficiency Marketers Concerned with employee/customer interactions Use standardization and self-service technology Heterogeneity

6. Customers Success of the sale lies in the service encounter Each purchase comes with a new interaction and experience Marketers The customer can consume only what the seller can produce Simultaneous Production and Consumption

7. The Four Components of a Service Physical Product • Whatever the organization transfers to the customer that can be touched • Must be customer oriented (create value)

8. The Four Components of a Service (cont.) ServiceProduct Physical Product • Includes all interactions with the customer • Core performance purchased by the customer • “Plan Your Work” the promise

9. The Four Components of a Service (cont.) ServiceDelivery ServiceProduct Physical Product • Refers to what happens when your customer buys the service • “Work Your Plan” deliver on the promise • Example: The way the customer is greeted

10. The Four Components of a Service (cont.) ServiceProduct ServiceDelivery Physical Product Service Environment Source: Rust, Roland T. (1993). Service Quality, p. 31. Adapted from Sage Publications. Used by permission. • The physical backdrop that surrounds the service • “Servicescape” • 3 Elements: ambient conditions; spatial layout; and signs, symbols, & artifacts

11. Interrelationships of Components

12. Experience: The Result of Purchasing a Service • An experience is the result of the four components of a service • May not be management’s goal, but it is what the customer attains • Should be memorable, unfold over a period of time, and be inherently personal • …therefore create and command greater economic value

13. Gap Model of Service Quality Premise: • The customer’s evaluation of a service purchase (e.g., their satisfaction) is determined by how well the purchase experience compares to their expectations of the purchase experience

14. Gap Model of Service Quality (cont.) Evaluations of services are based on expectations because the characteristics of services: • intangibility, • heterogeneity, and • simultaneous production and consumption make it almost impossible for consumers to evaluate services in the same way they evaluate goods: • that is, before they buy the product

15. Gap Model of Service Quality (cont.) Performance > Expectation Performance = Expectation Performance < Expectation

18. Reasons for Gap 1 • Inadequate marketing research • Lack of upward communication • Insufficient relationship focus

19. Ways to Close Gap 1 • Transactional surveys • Market-wide surveys • Mystery shopping • Service reviews • Customer advisory panels • Employee field reporting • Employee research • Focus groups

20. Gap 2 CUSTOMER COMPANY Customer-driven service designs and standards GAP 2 Company perceptions of consumer expectations

21. Reasons for Gap 2 • No customer-driven standards • Inadequate service leadership • Poor service design

22. Ways to Close Gap 2 • Service blueprinting • Visually displays the service by simultaneously showing the processes of: • Service delivery • Roles of customers and employees • Visible elements of the service

23. Gap 3 CUSTOMER Service Delivery COMPANY GAP 3 Customer-driven service designs and standards

24. Reasons for Gap 3 • Deficiencies in human resources • Failure to match supply and demand • Customers not fulfilling roles

25. Treat employees as customers Measure and reward strong service performers Tell employees what is expected of them and how they will be rewarded for meeting those expectations Let employees know the role they play in the company’s success and that what they are doing is important Employees want management to stop saying what it is going to do and do it Hire for service competencies and service inclination Be the preferred employer Train for technical and interactive skills Empower employees Promote teamwork Provide supportive technology and equipment Develop service-oriented processes Include employees in the company’s vision Employees want the opportunity to get ahead Ways to Close Gap 3

26. Gap 4 CUSTOMER External Communications to customers COMPANY Service Delivery GAP 4

27. Reasons for Gap 4 • Ineffective management of customer expectations • Over-promising • Inadequate horizontal communications

28. Gap 5 CUSTOMER Expected Service GAP 5 Perceived Service COMPANY

29. Reason for Gap 5 • Service has not managed Gaps 1-4

30. Dimensions of Service Quality • Reliability • Assurance • Tangible • Empathy • Responsiveness