Service
Characteristics
of Hospitality
and Tourism
Marketing
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Key Terms
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Interactive marketing
Internal marketing
Organization image
Physical evidence
Point-of-encounter
Service culture
Service intangibility
Service inseparability
Service perishability
Service-profit chain
Service variability
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“Managers do not control the quality of the product when
the product is a service . . . .
The quality of the service is in a precarious (risky) state –
it is in the hands of the service workers who ‘produce’ and
deliver it.”
- Karl Albrecht
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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
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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
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Characteristics of Service Marketing
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Characteristics of Service Marketing
Intangibility
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The attributes of services that cannot be
grasped by any of the five senses
Aspects of a service that are difficult to
grasp prior to purchase
Purchase is based on consumer
expectations
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Services Versus Goods
Tangibility Spectrum
Salt
 Soft Drinks
 Detergents
 Automobiles
 Cosmetics Fast-food
 Outlets

Tangible
Dominant
Fast-food
Outlets

Advertising
Agencies
Intangible
Dominant


Airlines
Investment
Management


Consulting
Teaching

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Services Versus Goods
•
Perishability
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–
If not sold by a particular time, the
opportunity to sell it again is gone
forever
Complicated by fixed capacity
Unique to the hospitality industry
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Services Versus Goods
Heterogeneity – no standardation
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Delivery of services is inconsistent due to
employee variance and varying needs of
customers
“Moment of truth” when the service product
meets service delivery and consistency is key
Customers are also varied and have different
wants and needs
The use of self-service technologies in an attempt
to standardize service
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Services Versus Goods
•
Simultaneous production and
consumption
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Services are consumed at the same time
they are purchased
Thus management is marketing in the
hospitality and tourism industry
Always the possibility of a new
experience with each purchase
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Services Versus Goods
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The Hospitality Product
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–
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The combination of goods, services,
environment and experience that the
consumer buys
Differences between services and
manufactured goods
Defines how the service should
theoretically work
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The Hospitality Product model
The Hospitality Product
Physical product
–The tangible component of service
Service environment
–The physical environment in which the
service is delivered
• Surrounding area
• Layout
• Signs and symbols
The Hospitality Product
Service Product
–The core performance or service
purchased by the patron
Service delivery
–What happens when the customer
actually consumes the service
The Hospitality Product
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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
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Service-Profit Chain
Five Links:
1. Healthy service profits and growth
2. Satisfied and loyal customers
3. Greater service values
4. Satisfied and productive service
employees
5. Internal service quality
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Three Types of Marketing in Service
Industries
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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
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Managing Differentiation
• Solution to price competition
• Differentiation through people,
physical environment, and
processes
• Differentiation through branding
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Managing Service Quality
• Exceed customers’ service - quality
expectations
• Expectations based on past
experiences, word-of-mouth, and
service firm advertising
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Tangibilizing the Product
• Providing “evidence” of the service
– Promotional Material
– Physical Environment
– Employee appearance
– Why is Trade Dress Protection
important?
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Managing the Physical Surroundings
• Improperly managed physical evidence
can hurt a business
• Surroundings should reinforce company
positioning in customer’s mind
• Organizational Image is how customers
perceive your organization
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Stress Advantages of Non-ownership
• The customer does not have ownership
of service product
• Stress as a benefit
– Rather than own and staff corporate
lodging, negotiate a rate with a hotel and
pay for only what you use
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Managing Employees as Part of the Product
• Employees are critical
• Training and motivating employees to
provide good customer service is internal
marketing
• A point-of-encounter is any point at
which the employee encounters the
customer
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Managing Perceived Risk
• Alleviate(reduce) customer anxiety due to
inability to experience the product
beforehand
• Familiarization trips encourage clients to
experience the enterprise in a low-risk
situation
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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
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Managing Consistency
• No surprises!
• Not only should services be provided
correctly, but they should also be done
the same way every time
• Beware of fluctuating demand and
unintentional company policies that
may affect consistency
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Managing the Customer Relationship –
CRM
• Combines marketing, business strategy
and information technology to better
understand the customers
• Develop unique, lasting relationships
with customers
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Service Quality and Service Gaps
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
• Zone of tolerance is the range where
customers are still satisfied
• Can use the SERVQUAL model
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Gap Model of Service Quality
Performance > Expectation
Performance = Expectation
Performance < Expectation
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
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Possible Levels of Customer Expectations
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Service Quality and Service Gaps
Gap 1
Gap between services expected by the customer and
management’s perceptions of customers’ expectations
Gap 2
Gap between management’s perceptions of customer
expectations and service quality specifications
Gap 3
Gap between service quality specifications and service
delivery
Gap 4
Gap between the service delivered and the service promised
Gap 5
Gap between the perceived service and the actual service
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Service Failure
• Problems will inevitably occur
• Keep the customer informed
• Provide service recovery options
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Overview of Service Characteristics: The Servuction Model
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Interaction Between Customer A and Customer B
• Contact between customers can be
positive or negative
• In some cases interaction between
customers can be managed
• Customers can significantly impact all
around them
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Contact Personnel
• Contact personnel have a direct
impact on the satisfaction of
customers
• Characteristic of inseparability of
customer and employee during
service delivery system
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Best Practices
• Ritz-Carlton Leadership Center offers
innovative ways to:
– Increase employee retention and loyalty
– Increase customer retention and loyalty
– Achieve service excellence in your industry
– Effectively drive your organization’s culture,
philosophy, vision, and mission
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Discussion Questions
A. Visit the web site of a hotel chain. What does the web
site do to make the product tangible for the customer?
Is there anything in the site that deals with the
characteristic of perishables.
B. Visit the web site of a tourism destination; it can be
either a city or a country. Explain how the site provides
tangible evidence relating to the experiences a visitor to
the destination can expert.
C. Who are the basic contacs persons at the three
different tourism operations; hotel, restaurant and
airline company. What are their roles as contact person
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End of Chapter
Slides