Chapter 6
The importance of market research
© Hudson & Hudson. Customer Service for Hospitality & Tourism
Topics Covered
o Tourism and hospitality research introduction
o Consumer research and customer loyalty
o Measuring service quality
o Critical incidents studies
o Lost customer research
o Online research
o Common research errors
o Effective use of market research in decision
making
‘At Your Service’ Spotlight:
Simply the Best
Service with no boundaries.
o Significant research
•
Press visits
•
Product development
o Attention to media and journalists
• Ski lovers as press coordinators
• Media visits
• Winterstart World Cup
• Top treatment of journalists
o Staff
• Teaching by example
• Excellence cards
•
Ride breaks
Introduction to research in
tourism and hospitality
o Market research often
• Considered costly and time-consuming
• Undertaken only around major developments
• Contributions to day-to-day operations overlooked
• Organizations overlook existing, accessible information
• Study results ignored or not fully considered
Applied Research in Tourism & Hospitality
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RESEARCH ON CONSUMERS
Identifying existing markets
Identifying potential markets
Identifying lapsed consumers
Testing customer loyalty
Developing detailed consumer profiles
Identifying general trends in demographics and
psychographics
Identifying changes in attitudes and behavior
patterns (generally)
Identifying changes in attitudes and behavior
patterns (product specific)
2.
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RESEARCH ON PRICING
Identifying attitudes towards prices
Testing attitudes towards packages and
individual pricing
Identifying costs
Identifying costing policies of competitors
Testing alternative pricing strategies
Testing payment processes (credit cards,
electronic funds transfer, etc.)
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RESEARCH ON PROMOTION
Testing and comparing media options
Testing alternative messages
Testing competitor’s messages and their
effectiveness
Testing new communications options (Internet,
email, Web pages social media)
Identifying cooperative opportunities
Measuring advertising and promotion
effectiveness
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RESEARCH ON THE COMPETITION
Measuring awareness
Measuring usage
Identifying levels of customer loyalty
Identifying competitors’ strengths and
weaknesses
Identifying specific competitive advantages
(locations, suppliers, etc.)
Identifying cooperative opportunities
Observing levels of customer service
RESEARCH ON THE OPERATING
ENVIRONMENT
Economic trends
Social trends
Environmental issues
Political climate and trends
Technological development and their impact
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RESEARCH ON A DESTINATION
Measuring residents attitudes
Benchmarking
Measuring customer loyalty
Identifying tourism activities
Identifying spending patterns
Branding research
Table 6.1
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RESEARCH ON PRODUCTS & SERVICES
Measuring attitudes towards existing products or
services
Identifying potential new products which may be
at the end of their product life cycle
Identifying products that are considered
acceptable substitutes/alternatives
Evaluating competitor’s products
Evaluating consumer attitudes toward décor,
presentation and packaging
Evaluating consumer attitudes about
combinations of products and services (bundles
of product attributes)
RESEARCH ON PLACE & DISTRIBUTION
Identifying attitudes towards location
Identifying attitudes toward buildings/premises
Identifying attitudes on virtual sites
Identifying potential demand for product or
services at other locations
Identifying cooperative opportunities for
distribution of information or services
Consumer research
and customer loyalty
o ‘Completely satisfied’ Enterprise customers
o ‘Voice-of-Customer Operating Model’
o Net Promoter Score for consumers
o Competitor intelligence
o Benchmarking
• Guest satisfaction scores (GSS)
Benchmarking UK’s top 20 attractions
Visitor Attraction Name
Victoria & Albert (V&A) Museum
National Gallery
Science Museum
British Museum
Natural History Museum
Chester Museum
Alton Towers
Thorpe Park
Edinburgh Castle
Tower of London
Legoland, Windsor
Eden Project
Tate Modern
Warwick Castle
London Zoo
York Minster
Madame Tussauds
London Eye
Blackpool Tower and Circus
Pleasure Beach Blackpool
Table 6.2 (Source: Based on Which?, 2011)
Customer Score (out of 100)
Rank
81
80
79
79
79
78
75
73
72
72
72
70
69
69
69
67
64
64
58
58
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
A DINESERV interview
The restaurant
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3
4
5
6
7
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10
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12
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15
16
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18
19
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23
24
25
26
27
28
29
Table 6.3
Has visually attractive parking areas and building exteriors
Has a visually attractive dining area
Has staff members who are clean, neat, and appropriately dressed
Has a décor in keeping with its image and price range
Has menu that is easily readable
Has a visually attractive menu that reflects the restaurants’ image
Has a dining area that is comfortable and easy to move around in
Has rest rooms that are thoroughly clean
Has dining areas that are thoroughly clean
Has comfortable seats in the dining room
Serves you in the time promised
Quickly corrects anything that is wrong
Is dependable and consistent
Provides an accurate guest check
Serves your food exactly as you ordered it
During busy time, has employees shift to help each other maintain speed and
quality of service
Provides prompt and quick service
Gives extra effort to handle your questions completely
Has employees who can answer your questions completely
Makes you feel comfortable and confident in your dealings with them
Has personnel who are both able and willing to give your information about
menu items, their ingredients, and methods of preparation
Makes you feel personally safe
Has personnel who seem well trained, competent, and experienced
Seems to give employees support so that they can do their jobs well
Has employees who are sensitive to your individual needs and wants, rather
than always relying on policies and procedures
Makes you feel special
Anticipates your individual needs and wants
Has employees who are sympathetic and reassuring if something is wrong
Seems to have the customers’ best interests at heart
Benchmarking fast-food restaurants
Goal: Competitive benchmarking of fast-food restaurants
Criteria
Service
Image
Menu
Selection
Attributes
Location
Attributes
Attributes
Drawing
Power
Accessibility
Attributes
Attributes
Cleanliness
Healthy Food
Proximity to
Residence
Amenity
Taste of Food
Service
Responce
Variety of
Food
Proximity of
Workplace
Store
Operating
Hours
Competitive
Price
Employee
Courtesy
Word of
Mouth
Reputation
Proximity of
Highway
Quality of
Prior Service
Safety
Alternatives
McDonald’s
Wendy’s
Burger King
Figure 6.1 (Source: Adapted from Min and Min, 2010)
Subway
Arby’s
Hardee’s
The Gaps Model of Service Quality
Personal
Needs
Group
Needs
Expected
service
Customer
Satisfaction
Gap 5
Perceived
service
Service
delivery
Gap 3
Gap 2
Gap 4
Past
experience
e
Word of
Mouth
External
Communication
Perceived customer
expectations by
management
Gap 1
For Consumer
Figure 6.2 (Source: Parasuraman, et al., 1985)
Service quality
standards
For Marketer
Measuring service quality
o Importance–performance analysis (IPA)
• Relative importance of attributes versus actual performance
o SERVQUAL
• Difference between consumers’ expectations and perceptions of
service quality
• 22 item scale, five dimensions
• has been adapted to serve different industry sectors
o Comment cards
• performance-based measure and diagnostic tool
• feedback at time of service experience
• may be more effective than SERVQUAL or IPA
o Mystery shopping
• participant observation
• A common market research technique
• Rich information about service experience as it unfolds
IPA attribute ratings for ski destination
4.00
A: Concentrate Here
Figure 11.3: Importance
B: Keep up the Good Work
3.75
Hot Water
Importance of Attributes
3.50
Information on Ski Slopes
3.25
3.00
Separate Snowboarding Areas
Off-Piste Skiing
2.75
2.50
2.25
Live Bands in Bars
2.00
1.75
1.50
C: Low Priority
D: Possible Overkill
1.25
1.00 1.25
1.50
1.75
2.00
2.25
2.50
2.75
Performance of Attributes
Figure 6.3 (Source: Hudson and Shephard, 1998)
3.00
3.25
3.50
Advantages and disadvantages of
mystery shopping
Advantages
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Offers deep insights into feelings and motivations
behind service/practice (Palmer, 2000)
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Experience is natural and not contrived for the
sake of the observer (Bootte and Mathews, 1999)
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Serves as a management tool for improving
standards in customer service by providing
actionable recommendations (Erstad, 1998;
Cramp, 1994)
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Ideal for investigating services (Crano and
Brewer, 1986; Grove and Fisk, 1992)
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Serves as a management tool for enhancing
human resource management (Erstad, 1998)
Disadvantages
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Raises ethical issues by observing people without their
knowledge (Jorgenesen, 1989)
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Based on assumptions that need to be made explicit
and addressed (Savage, 2000)
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Information collected may be biased as a result of
arbitrary or careless selection of observation periods,
or the observers own prejudices (Smith, 1995)
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In the long term, advantages for improving customer
service can wear off if not integrated with other
measures of service delivery process (Wilson, 1998)
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Can be very costly and time-consuming (Grove and
Fisk, 1992)
Table 6.4 (Source: Adapted from Hudson, Hudson & Miller, 2004)
Snapshot:
Checking out the Competition
You can never be too old to learn new things from just about anyone.
o Mystery shopping
• Gather information on industry rivals
• Stay current, competitively priced
• Improve customer service and guest communication
• Enhance staff training and understand nuances of staff-guest
interactions
o Websites and publications
o Stay abreast of trends
o Learn what competitors are doing
o Business in remote settings
o Social media
• Brand Karma
Photo courtesy of Ben Hall
Critical incidents studies
o Critical incident technique (CIT)
o Qualitative interview procedures, verbatim accounts:
• Consumer evaluation of services
• Service failure and recovery
• Employee and customer participation in service delivery
• Service experience
o
Four main benefits of CIT
• Sound information easily translated into action
• Useful when the service is new, little information exists
• Useful for assessing cross-cultural perceptions
Tracking service quality
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
1
2
3
4
5
6
Mean Expectations
7
8
9
10
11
12
13
Mean Performance
X-Axis Key: various stages of the Holiday Experience
1. Brochure
5. Transfer to accommodation
9. Resort activities
13. Transfer to airport
2. Waiting to go
6. Arrival accommodation
10. Skiing/snowboarding
3. Journey
7. Accommodation
11. Company magazine
Figure 6.4 (Source: Adapted from Hudson, Hudson & Miller, 2004)
4. Meeting the representative
8. Welcome
12. Departure
Lost customer research
o Few organizations have effective strategies for evaluating
customer attrition
o Research targets customers who have dropped the
company’s service
• Makes inquiries about reasons for leaving
• Identifies failure points and common problems
• Calculates the cost of lost customers.
o NBRI study – root cause driving down customer loyalty and
customer satisfaction (68 %) identified as ‘wait time’
Online research
o Electronic and online surveys
• Computers placed in high-traffic locations
• Customers asked to complete online surveys
• Input tabulated, available instantly
• Can be accessed by corporate and front-line staff
⁻ Instant service recovery
⁻ Long-term service improvement
o Virtual focus groups
o Online ‘chat’ sessions
• Pre-recruited respondents in guided online discussion
⁻ Time- and cost-saving benefits
o Virtual worlds e.g. Second Life
o Social media and crowdsourcing e.g. Brand Karma
Common research errors
o Not enough qualitative information
• Especially important for launching new service or
product
o Improper use of sophisticated statistical analysis
• Errors in collection, tabulation, or analysis of data
o Failure to have a representative sample
• Inaccurate estimates of the thoughts and
behaviors of larger population
o Problems with interpretation
• Skill and dexterity is required on the part of the
researcher
Effective use of market research
o Research can play a critical role in development
• Practical decision-making at a strategic level
• Academic understanding of industry development
• Feasibility studies for new projects
o Successful research contingent on 3 conditions:
• Sufficient resources
• Research results stand, even when they conflict with
preconceived views
• Results should be implemented e.g. Courtyard by Marriott
Case Study:
Driving complete customer satisfaction
Going ”above and beyond” to satisfy customers.
o Enterprise Service Quality index (ESQi)
• Phone survey with two questions
• Results collected, analyzed quarterly
• Branch by branch comparisons
• Promotions based on rankings
• ”Brand Integrity Audits”
o ‘Completely satisfied’ 3 times more likely to rent again
o 3 satisfaction priorities:
• Attitude, helpfulness of staff
• Speed of transaction
• Ceanliness of the car