Services Marketing

Service Characteristics of
Travel and Tourism
Objective: discussing four distinguishing characteristics of
services and several things management of service firms and
in particular travel and tourism firms can do to increase the
effectiveness of their business.
Services Marketing
Service industries are quite varies: governmental
services - courts, hospitals, police, fire
departments, postal services, schools etc; private
nonprofit organizations - museums, colleges,
hospitals etc; business organizations - airlines,
hotels, restaurants, advertising, real estate etc.
Satisfying the Customers
The aim of the service organizations is also
serving and satisfying the customer.
The belief that customer comes first is
reinforced in Four Seasons Hotels where
employees who go to extraordinary efforts to
satisfy the customer are entitled to be the
“Employee of the Year”, story of Ron Dyment,
doorman in Toronto.
Nature and Characteristics of
There are four distinguishing characteristics of
services. They are;
Service Intangibility
means that unlike physical products, services cannot be
seen, tasted, felt, heard or smelled before they are
Buyers look for “signals” or “tangible evidences” like
the place, people, price, equipment and information
about the service in order to reduce uncertainty caused
by intangibility before they pay the price. E.g. the
cleanliness of the restaurant, employee uniforms of the
hotel, Heublein vs Smirnoff.
Service Inseparability
means that services cannot be separated from their
both (1) providers and (2) other customers.
If a service employee provides the service, then the
employee is part of the service. E.g. the food in the
restaurant may be outstanding, but if the service person
is rude, customers will downrate the overall service of
the restaurant.
the other customers affect the service outcome as well.
E.g. a couple may choose a restaurant but if a group of
loud customers is seated next to them, the couple will
be disappointed.
Service Variability
means that the quality of services depends on who
provides them, plus, when, where, and how they are
provided. E.g. within a given hotel chain, one reception
desk agent may be cheerful and efficient one day but
would be unpleasant and slow the other day.
Service providers’ service quality depends on his energy
and his frame of mind at the time of each customer
Fluctuating demand makes it difficult to deliver
consistent services during periods of peak demand.
Variability or lack of consistency is the major cause of
customer disappointment in the industry.
Service Perishability
means that services cannot be stored for later sale or
use. E.g. if a 100 room hotel can sell only 40 rooms
today, selling the remaining 60 is gone forever.
If service providers are to maximize revenue, they must
manage capacity and demand. E.g. hotels charge lower
rates in the off-season to attract more guests;
restaurants hire part-time employees to serve during
peak periods; tour operators and airline companies have
last-minute sales.
Service perishability is a serious problem when demand
Marketing Strategies for
Service Firms
Services are different form tangible products,
that is why, additional marketing approaches are
needed to market services.
In service businesses, the customer and frontline service employees interact. Service
providers must interact effectively with
customers to satisfy them. That is why,
companies take care of their employees to make
profit. Because they believe that only
satisfied and productive service employees
can create satisfied and loyal customers.
Internal marketing; means that the service firm
must effectively train and motivate its customercontact employees to provide customer
 Interactive marketing; means that service quality
depends on the quality of the buyer-seller
interaction during the service encounter.
In order to increase the profit margin, there
are three major marketing tasks for service
Managing Service Differentiation
Differentiated offer, delivery and image are the
keys for the solution to price competition.
The offer can provide innovative features like e.g. inflight movies, advance seating, frequent-flyer award
programs in an airlines. British Airways offers a
sleeping compartment and hot showers.
The delivery can be differentiated by having
better customer-contact people, developing a
superior physical environment, or by designing a
superior deliver process like e.g. home banking
can be provided as a better way to deliver
banking services.
 The image can differentiate the service company
through symbols and branding.
Managing Service Quality
A service firm can also differentiate itself by
delivering consistently higher quality than its
competitors do.
Service quality will always vary, depending on the
interactions between employees and customers. A
company cannot always prevent service problems
but can recover them. A good service recovery can
turn angry customers into loyal ones. Companies
empower front-line
service employees (giving authority to do
whatever it takes to keep customers happy) to
recover problems.
 Good service companies also communicate their
qualities to employees and provide performance
Managing Service Productivity
Service productivity can be increased by;
training the employees better or hiring new and better
industrializing the service with equipment and standardized
production as in McDonald’s
using technology to save time and money
Trying to increase the productivity would reduce quality
and diminish customer service. That is why, some
service providers accept to have lower productivity
Particular Characteristics of Travel
and Tourism Services
In particular, travel and tourism products have the
following special characteritics;
Seasonality and demand fluctuations
High fixed costs of service operations
Interdependence of tourism products
Seasonality and demand fluctuations
As far as most leisure tourism markets are concerned,
demand fluctuates greatly between seasons of the year.
As a result, the occupancies in many tourism businesses
increases to 90 to 100 per cent in the high season but
drops to 30 per cent or less in the low season. In
addition, seasonal closure of many leisure tourism
businesses is common as well. These demand
variations in tourism is more important because of
perishability. That is why, generating demand when
there is less demand, is always the major preoccupation
for marketing managers.
High fixed costs of service
In the travel and tourism industry, it is generally the
case that the operations have high fixed costs and
relatively low variable costs. This fact focus all service
operator’s attention on the need to generate extra
demand. Since most large scale businesses are obliged
to operate on a very narrow margin between total cost
and total revenue because of intense competition, plus
or minus one percentage point in average load factors
makes the difference between profit or loss.
Interdependence of tourism
The fortunes of all tourism organizations in a
destination are linked. Since a vacationer
chooses attractions at a destination together
with the products of accommodation, transport,
catering etc., all organizations should function in
coordination. “Partnership”
Marketing in tourism is shaped and
determined by two important factors;
the operating characteristics of supplying
 the nature of demand for tourism
Useful Links and Sources
Kotler, P.; Bowen, J. and Makens, J. (1999).
Marketing for Hospitality and Tourism (2nd ed.).
Prentice Hall. NJ.
Kotler, P. and Armstrong, G. (2006) Principles
of Marketing (11th ed.). Prentice Hall. NJ.
Middleton, V.T.C. (2004) Marketing in Travel
and Tourism (3rd ed). Elsevier. Oxford.
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